Reality bites as Yemen begins life after Saleh

* Hadi wins mandate to introduce reforms, restructure army

* Washington praises election as a milestone to democracy

* Voting ended early after attacks on Aden poll centres (Recasts, add quotes)

By Joseph Logan and Tom Finn

SANAA, Feb 22 (Reuters) - Yemen began a new era without Ali Abdullah Saleh on Wednesday after an uncontested election that gave his deputy a mandate to launch reforms in a country facing an economy in meltdown, a tenacious al Qaeda wing and rebellions in the north and south.

Tuesday's election, which was praised by Washington as a milestone in the country's transition to democracy, propelled Abd-Rabbu Mansour Hadi to the presidency of one of the poorest countries in the Middle East, in line with a deal signed in November to end months of protests against Saleh's 33-year rule.

After a day of jubilation in the capital Sanaa at the final ousting of a fourth veteran leader by the "Arab Spring" uprisings, Yemenis returned to work as reality began to set in.

"Yesterday my friends were telling me this was the beginning of a new era, an end to corruption. Today it's like nothing happened, nobody has even mentioned it to me. No one is excited about hearing the election results because they already know who has won," 22-year-old activist Yusra Ahmed said.

Although Hadi's victory is assured, high turnout would give him the legitimacy he needs to carry out changes outlined in the Gulf-brokered power transfer deal, including the drafting of a new constitution, restructuring the armed forces and preparing for multi-party elections in two years' time.

The election committee is expected to release initial results later on Wednesday. An official on Tuesday estimated turnout was as high as 80 percent.

"Right now Hadi is the only hope for this country, no other man in Yemen enjoys such broad political backing from so many competing factions. We have to pin our hopes on him," said 45-year-old pharmacist Ahmed al-Sharafi in Sanaa.

But the new leader's legitimacy is being questioned by northern Shi'ite rebels and separatists in the south, where the vote was marred by violence in which at least nine people were killed. Members of Saleh's inner circle also retain key posts.

Security forces opened fire on stone-throwing anti-election protesters in the southern province of Lahej and gunmen stormed voting centres, stealing ballot boxes and setting them on fire in the street, residents and local officials had said.

Southerners demanding a divorce from the north had called for a boycott of the vote.

"All we can do is wait and see what the next days bring now that the new president has taken up the reins of power," said Abdullah Mohammed, a resident of the southern port city of Aden, where violence forced polling stations to close early and kept many voters away.

INNER CIRCLE REMAIN

The uprising against Saleh was part of a wave that convulsed North Africa and the Middle East. Saleh became the fourth Arab autocrat toppled in the wave of unrest that began in Tunisia more than a year ago.

"This is another important step forward in their (Yemenis') democratic transition process and continues the important work of political and constitutional reform," the U.S. State Department said in a statement following the election.

Washington wants a united Yemeni leadership as a partner in its fight against al Qaeda. Yemen is one of the countries that allow U.S. forces to use drone aircraft to strike al Qaeda militants, who have exploited weakened central government control to expand their foothold in the country's south.

Saleh, in the United States for further treatment of burns suffered in an assassination attempt last June, joined Tunisia's Zine al-Abidine Ben Ali, Egypt's Hosni Mubarak and Libya's Muammar Gaddafi as leaders toppled in the Arab Spring..

The veteran leader may be gone, but members of his inner circle remain, not least his son Ahmed Ali, who commands the Republican Guards, and Yehia, his nephew, who leads the Central Security Forces. They are locked in a standoff with tribal leader Sadeq al-Ahmar and dissident General Ali Mohsen.

A senior Yemeni official said Saleh was in California and that he planned to return home before the end of the week to attend Hadi's inauguration ceremony, expected later this week.

Hadi will have to unite the military and engage with southern separatists and northern rebels, who saw in last year's uprising an opportunity to further their own goals.

A leader in the southern movement congratulated southerners on their "victory" in boycotting the election and said the movement's factions would soon meet for consultations to decide whether to take part in a national dialogue prescribed by the Gulf initiative.

"The new situation which these elections will create will not differ from the previous situation because the regime is the same," Ameed Nasser al-Noba said.

Southerners, who accuse the north of usurping their resources and discriminating against them, are demanding a divorce from the north. The two regions were separate countries until Saleh united them in 1990, and fought a civil war in 1994.

"The problem is there is no trust. They have wrong ideas about us. They can't differentiate between the people of the north and the regime of Ali Abdullah Saleh and we fear that all they want to do is tear the country into back two halves," said 37-year-old civil engineer Najib al-Udani in Sanaa.

In the northwest of the country, Shi'ite rebels known as Houthis have effectively carved out their own state within a state along the border with top oil exporter Saudi Arabia.

They also called for a boycott of the vote, which they decried as a plot hatched by the six-nation Gulf Cooperation Council in league with the United States.

Also pressing on Hadi is a looming humanitarian crisis in a country where 42 percent of the population lives on less than $2 per day and water, fuel and electricity are scarce.

"The only thing that has changed is that the electricity has come back on, that's the only difference," said 34-year-old Saeed al-Amiri. "I think people feel a bit cheated. There was all this talk of change and mass participation but now what? Casting a ballot doesn't stop you from feeling hungry."