Kay Rala Xanana Gusmao

President, East Timor

Kay Rala Xanana Gusmão has every reason to crave revenge against East Timor's former occupying power. Indonesia invaded the former Portuguese colony in 1975, and as many as 250,000 people -- at least one member of every East Timorese family -- died during a brutal 24-year military occupation. But Gusmão, a guerrilla leader who in May, 2002, became East Timor's first democratically elected President after its liberation from Indonesia, has resisted calls for retribution. The 57-year-old says he's too busy building a nation out of the ruins.

Indeed, the onetime political prisoner is winning kudos for savvy dealmaking that could go a long way toward helping East Timor lessen its dependence on foreign aid. In April, an agreement that Gusmão's administration clinched with nearby Australia took effect, giving East Timor 90% of the $6 billion in proven oil and gas reserves under the narrow waterway separating the two countries. Royalties have already started trickling in, but serious funds will flow once Japan's Tokyo Electric Power Co. and other buyers start receiving their gas in 2006.

Gusmão's smooth leadership style and moral authority as a former freedom fighter are also being credited for the steady progress being made by U.N. aid workers on reconstruction efforts and improvements in fields such as health care. Since September, 1999, 85% of East Timor's children under 5 have been vaccinated against various diseases, more than 3,000 head of cattle have been distributed to farmers, and the World Bank and other international donors have funded 345 startup companies, creating 1,300 jobs. That may not sound like much, but every paycheck helps in a country where 40% of the population lives in poverty and per capita income is just $400 per year. What's more, some 250,000 children are attending school regularly now -- 30% more than during the Indonesian occupation.

Gusmão's next task is building a cordial relationship with Indonesia. East Timor's population of 1 million has followed his call not to strike back at their former overlords. And already, there are signs the policy is paying off. At Gusmão's invitation, Indonesian President Megawati Sukarnoputri, elected President two years after East Timor's liberation, visited the capital of Dili on May 18 to attend independence day festivities. Instead of pushing for Indonesian army generals to stand trial for war crimes, Gusmão wants a rapid reopening of the sea, land, and air links that will expand bilateral trade ties. The people of East Timor can be thankful that their leader is far more concerned about his country's future than he is with settling old scores.

    Before it's here, it's on the Bloomberg Terminal.