It has finally happened. After months of 'will he, won't he' melodrama, Xanana Gusmão, Timor-Leste's resistance leader and long-serving prime minister, has stepped down.

His successor, Dr Rui Maria de Araújo, will be sworn in as prime minister in a ceremony in Dili later today. The new PM will head an administration that includes almost all of Timor-Leste's political parties. Gusmão himself will remain deeply involved; he has chosen to be in charge of a new super-ministry with responsibility for strategic planning and economic development.

The contrast between the two men could not be starker. The raffish Gusmão, 68, is the dictionary definition of mercurial, whereas the man handpicked to replace him carries more the air of a serious-minded technocrat. Araújo, 50, pledges to bring a commitment to evidence-based policy-making to his new administration. He was a respected Minister of Health and since 2008 has been an adviser to Timor-Leste's Finance Minister. A man with strong resistance credentials, Araújo is a medical doctor by training with postgraduate qualifications from New Zealand. 

Speaking in his first Australian interview, the incoming prime minister indicated a different approach: 'my style is to look carefully at the issues and weigh up the pros and cons. As a doctor I'm used to weighing evidence before making a diagnosis and determining a course of treatment. As prime minister, I'll do the same.' 

The accession of Araújo, from the opposition FRETILIN party, caps an extraordinary period of rapprochement and realignment in Timorese politics.

FRETILIN effectively wrote the country's 2002 constitution to marginalise Gusmão in a powerless office as the country's first president. For years, FRETILIN and Gusmão's CNRT party could barely stand the sight of each other. In Gusmão's first term as prime minister from 2007, FRETLIN waged a blistering campaign to hold the government to account. But ever since Gusmão's formidable brand of retail politics won out in the 2012 elections, FRETILIN has adopted a more accommodating approach. Mari Alkatiri, the first prime minister and previously a strident critic of Gusmão's improvident spending, now heads an optimistic scheme to transform the remote Oecusse enclave into a free enterprise zone. 

That the parties were able to hammer out this deal is testament to restored ties.

For Araújo, the idea of having a cross-party government makes pragmatic sense. 'We are a small country and we cannot afford people with skills and talents who can contribute to sit outside the government', he said. His new administration will include four FRETILIN members. It will also be a slimmed down ministry, albeit one still carrying more weight than a doctor would recommend is healthy. Gusmão's last administration was bloated and unwieldy with 53 ministers and vice-ministers. In the last few weeks, Gusmão 'invited' 25 to step down, and all did so with a relative lack of fuss. Araújo's ministry, at 38, will have nearly a third fewer members.

This will be another orderly political transition with zero sense of crisis attached to it, a welcome change in a country that has suffered its share of political crises and resultant instability. 

What's also extraordinary is that Gusmão would prefer Araújo to anyone from his own political party. It is akin to Tony Abbott stepping down to serve under Bill Shorten. Araújo said he was astonished at Gusmão's offer, made during a visit to Araújo's office last week. He had been at best hoping for a secondary position but not the top spot. 'Xanana said he would give me all his political support', Araújo told me. The two men go years back, Araújo having met Gusmao several times when the resistance leader was in hiding. Gusmão's CNRT colleagues are putting on rictus smiles of delight.

The new prime minister faces a stack of challenges. A major one will be how to diversify the economy away from oil and gas, which accounts for well over 90% of government revenue. Araújo identifies tourism, agriculture and fisheries as the three areas he will focus on. He'll be anxious to keep with Gusmão's efforts to bridge the urban-rural divide by prioritising local development. There's also the perennial issue of how to kick-start large swathes of the sleepy public service into action, and address the extreme poverty that many in the population live with every day. 

Araújo certainly seems to have all the intellectual skills needed to be a prime minister. The major question is whether he has the political chops to navigate the shoals of Timor-Leste's coalition politics, with all its trade offs, balancing acts and blank check approaches to heading off political problems. A related issue is whether any new prime minister would really relish the prospect of having a predecessor, particularly such a powerful one, sitting at the cabinet table. These are issues for the future. For now, all seems set for Timor-Leste's new leader, who says his new job is an 'honour and a privilege'.