By Anthony Boadle
HAVANA (Reuters) - Ailing Cuban leader Fidel Castro said onTuesday that he will not return to lead the communist country,retiring as president 49 years after he seized power in arevolution and became a central figure of the Cold War.
Castro, 81, who has not appeared in public since undergoingstomach surgery almost 19 months ago, said he would not seek anew term as president or leader of Cuba's armed forces when theNational Assembly meets on Sunday.
"To my dear compatriots, who gave me the immense honour inrecent days of electing me a member of parliament ... Icommunicate to you that I will not aspire to or accept -- Irepeat not aspire to or accept -- the positions of president ofthe Council of State and commander-in-chief," Castro said in astatement published in the Communist Party's Granma newspaper.
U.S. President George W. Bush, who has tightened adecades-old economic embargo against Castro's government, saidhe hoped Castro's retirement would mark a new era in Cuba.
"I believe that the change from Fidel Castro ought to begina period of a democratic transition," Bush said in Rwandaduring a tour to Africa. "Eventually this transition ought tolead to free and fair elections. And I mean free and I meanfair."
Cuba's National Assembly, a rubber-stamp legislature, isexpected to nominate Castro's brother and designated successorRaul Castro as president. The 76-year-old defence minister hasbeen running the country since emergency intestinal surgeryforced his brother to delegate power on July 31, 2006.
Raul Castro has raised hopes of economic reforms but he isunlikely to make bold political changes to the one-party state.Fidel Castro will remain influential as first secretary of theruling Communist Party.
"This is a crucial moment. Cuba wants change, the peoplewant change," said Oswaldo Paya, Cuba's best-known dissident.He said a succession headed by Raul Castro would not satisfyCubans and called for an end to censorship.
Cubans on the empty streets of Havana were not surprised byCastro's retirement, first announced on Granma's Web site inthe middle of the night.
"Everyone knew for a while that he would not come back. Thepeople got used to his absence," said Roberto, a self-employedCuban who did not want to be fully named.
"I don't know what to say. I just want to leave. Thissystem cannot continue," said Alexis, a garbage collector.
In a deserted Revolution Square, the site of manyhours-long speeches by Castro to massive crowds, a lone soldierstood guard at government headquarters. The city was calm.
CHARISMATIC REVOLUTIONARY
The charismatic Castro led the bearded and cigar-chompingguerrillas who swept down from the mountains of eastern Cuba tooverthrow U.S.-backed dictator Fulgencio Batista in 1959.
He then turned Cuba into a communist state on the doorstepof the United States and became the world's longest-servinghead of state, barring monarchs.
Castro survived a CIA-backed invasion of Cuban exiles atthe Bay of Pigs in 1961, as well as assassination attempts, thecontinuing U.S. trade embargo, and an economic crisis in the1990s after the collapse of Soviet bloc communism.
He played a key role in taking the world to the brink ofnuclear war in 1962 when he allowed Moscow to put ballisticmissiles in Cuba, leading to a 13-day stand-off between U.S.President John F. Kennedy and Soviet premier Nikita Khrushchev.
Famous for his long speeches delivered in his greenmilitary fatigues, Castro is admired in the Third World forstanding up to the United States but considered by hisopponents a tyrant who suppressed freedom.
At home, supporters point to Cuba's advances in health andeducation for all its citizens. But critics, led by the UnitedStates and the hundreds of thousands of Cubans who left to liveabroad, say he turned the Caribbean island into a police stateand that his policies wrecked the economy.
Castro came close to death in 2006 but Cuba's leadershipshowed no sign of collapse during his health crisis.
"Fortunately, our Revolution can still count on cadres fromthe old guard and others who were very young in the earlystages of the process," Castro said in Tuesday's statement.
He has been seen only in pictures and video film, lookinggaunt and frail, since he handed over power provisionally tohis brother. His health improved enough a year ago to allow himto receive visits from foreign allies and write reams ofarticles published by Cuba's state press.
"This is not my farewell to you. My only wish is to fightas a soldier in the battle of ideas. I shall continue to writeunder the heading of 'Reflections by comrade Fidel.' It will bejust another weapon you can count on. Perhaps my voice will beheard. I shall be careful," Castro said in Tuesday's message.
Raul Castro has raised expectations of economic reforms toimprove the daily lot of Cubans since standing in for hisbrother, but he has yet to deliver.
"It was logical for Fidel to quit because he has beensaying that he is not well," said a musician leaving a cabaretin the early hours of Tuesday. "But nothing will change untilthe government makes economic reforms that Cuba needs."
(Additional reporting by Rosa Tania Valdes in Havana,Deborah Charles in Rwanda and Michael Christie in Miami;Editing by Kieran Murray)