JAKARTA -- Xanana Gusmao, the former leader of East Timor's separatist revolt against Indonesian rule, resigned as the young country's prime minister on Friday morning.
The move follows a year of speculation that Gusmao would step down before the end of his term in 2017 due to his age, back problems and to clear the way for younger leaders. At one point, he had said he would resign in September 2014.
A replacement for Gusmao, 68, has not been named. Speculation centers on Rui Araujo, a former health minister. Former President Jose Ramos-Horta called Araujo "an outstanding leader - honest, experienced, humble," in comments to the Nikkei Asian Review.
Agio Pereira, a government spokesman and the minister of state, is also thought to be a contender.
The prime minister is to be decided after a new cabinet is formed, likely next week. The new administration will include members of Fretilin, the main opposition party, alongside Gusmao's National Congress for the Reconstruction of Timor-Leste, known by the acronym CNRT.
Ramos-Horta expects that Gusmao will retain a government role despite past talk of retiring to the hills to write poetry and grow pumpkins. "Xanana thinks strategically and is genuinely committed to hand over to a new generation of leaders but at the same time he is not going to walk away," said the former leader, who now heads a UN mission in Guinea-Bissau. "He will stay in cabinet overseeing a high-level strategic planning agency that charts the country's long-term development."
Gusmao spent seven years in jail in Jakarta over his role in the rebellion against Indonesia's occupation of the former Portuguese colony. After a euphoric return to Dili in the wake of East Timor's vote to secede from Indonesia in 1999, Gusmao was elected the new country's first president in 2002.
Five years later he abandoned that ceremonial role, deploying a formidable charisma and unrivaled prestige to lead the CNRT into government in closely fought elections. Gusmao remained prime minister after the 2012 election, when the CNRT won 30 out of 65 seats before forming a coalition with two small parties.
However the shadow of East Timor's internecine rivalries has hung over Gusmao, whose initial decision to run for office in 2007 was partly prompted by near civil war the year before, when fighting between factions in the security forces resulted in 10% of the population being driven from their homes. His administrations have sought to paper over those divisions with some success.
Gusmao presided over a rapidly growing economy, buoyed by oil and gas money. Public spending has improved lives for the country's hard pressed poor, who typically did not have clean water or electricity prior to Gusmao's taking office.
Sebastiao dos Santos, a shopkeeper and coffee trader in the mountain town of Gleno, said that "life has improved in the last few years, the roads are getting better, the power works better,"
But a new report on the country by the Overseas Development Institute in London criticized Gusmao's administration for developing "a growing patronage system." The institute and other critics cite corruption scandals that have tarnished two ministers, high spending on veteran's pensions and road building contract awards to connected cadres. Falling oil prices are also set to hit East Timor's budget hard, as most government revenue is generated by the sector.