Mark Forbes, Canberra – Jose "Xanana" Gusmao will become East Timor's first president next year despite his pledge not to nominate, according to fellow independence campaigner Jose Ramos Horta.

Mr Ramos Horta, the Nobel peace laureate and East Timor's de facto foreign minister, said he had detected a change in Mr Gusmao's thinking in the past month and was confident he would contest the presidential post. Mr Gusmao resigned as head of the transitional government in April, pledged not to run for president and nominated Mr Ramos Horta for the role.

In Australia for talks with the Federal Government this week, Mr Ramos Horta also told The Age that an Indonesia led by Megawati Sukarnoputri would normalise relations with an independent East Timor, despite fears to the contrary.

The East Timorese were viewing August's elections for a constituent assembly with a mixture of excitement and anxiety, fearful of further chaos after the bloodshed that followed their independence vote 18 months ago, Mr Ramos Horta said.

"We are well on the road to a government, constitution, head of state and the people are proud about that," he said. "They want to see enshrined in the constitution fundamental guarantees – of freedom of expression, freedom of religion, of private property ... people are tired of violence."

"The single most important issue for them is who is going to be the president. And there is only one person they all, with unanimity, want. That is Xanana Gusmao. For them, independence, freedom, is associated with Gusmao, so a lot of people are worried he says he is not running for president - many say if he is not running, they will not bother voting. But I believe he will run," he said.

Mr Ramos Horta said he detected a shift in Mr Gusmao's thinking a month ago, when Mr Gusmao indicated he was amenable to considering running. Mr Ramos Horta did not rule out his own candidacy, but said it would "be the saddest day in my life if I have to run for president. In any case it is an unlikely possibility, so I am not worried about it."

The prospect that troubles many East Timorese – Mrs Megawati's likely ascension to the Indonesian presidency – would not present a threat to East Timor, despite her fervent nationalism and links to the military, Mr Ramos Horta said. "I have good feedback from those who have spoken to her on my behalf ... that she accepts the reality of an independent East Timor and will normalise relations," he said.

"If and when she becomes president, she will have to come to terms with the monumental task and challenges around her in regard to internal Indonesian problems, from Ambon to Aceh to West Papua to Kalimantan. "She has to face up to the World Bank and IMF, she has to create jobs for three million new workers who every year enter the workforce. If she has time to seek to antagonise East Timor she is really a herculean person," Mr Ramos Horta said.

Mrs Megawati would recognise that it is in Indonesia's national interest to normalise relations and the international community would judge her to a large extent on how she pursued justice for the victims of violence in East Timor, Mr Ramos Horta said. He said that her administration should persecute the military responsible for crimes in East Timor and disarm the militias.