He is everything one would expect of an energy baron: a dignified, church-going Republican in pinstripes with a tightly guarded home, a private plane at the ready and a devotion to free enterprise. But Peter MacDonald leads not one of the seven-sister oil giants but rather the fuel-rich Navajo nation. The new consortium he has founded, called CERT (Council of Energy Resource Tribes), has the power to become a domestic OPEC. That makes MacDonald, whose Navajo name, Hashkasilt, aptly translates "he who clasps with strength," the best symbol of the energy crunch since gas lines. "Right now," says one worried top Washington official, "I'd rather be a Navajo than the president of Exxon. They're going to get even for the last 200 years."

MacDonald, 50, scoffs at such fears among "the paper tribe" of the Potomac, as he facetiously calls federal bureaucrats. "I don't know if they are jittery because they think I'm coming to scalp them," he says, "but if they are, they are mistaken." The mistake is easy to make. The 24 member tribes now control sizable reserves of oil and natural gas, as well as a third of all the high-BTU coal west of the Mississippi and more than half the U.S. supply of uranium. The strippable coal reserves alone, according to Energy Department figures, are worth $1 trillion. Miffed thereby at President Carter's exclusion of him from the Camp David energy summit, MacDonald held talks with OPEC representatives last month, made noises about selling fuel abroad—and hired a savvy new chief marketing expert for CERT: Ahmed Kooros, who was previously the deputy oil and finance minister for the Shah of Iran. Suddenly Energy Secretary Charles Duncan found time to meet with Indian leaders in Denver, where he kept a delegation of key Western governors pacing the foyer when the meeting ran long. Back in Washington, Duncan formed a whole new office at Energy to deal exclusively with Indian affairs.

"You have to be as cunning as they are," laughs MacDonald. "They don't come at you with long knives and blue coats anymore—they come with legislative and judicial cavalry. Talking to OPEC got their attention. But we're not out to gouge anyone—we just want to use the system of private enterprise. We're trying to become self-sufficient under the capitalistic system America loves best."

The government could help most, MacDonald says, by undoing some of its presumed help of the past. It started in 1868, when Washington returned to the Navajos their supposedly worthless reservation—now a 25,000-square-mile tract the size of New England that sprawls across Arizona, New Mexico and Utah. All negotiations for Navajo coal, oil and mineral rights were turned over to the Bureau of Indian Affairs, a federal agency for which MacDonald has nothing but contempt. "When Custer left for the Little Big Horn, he stopped by the BIA office and told them, 'Don't do anything until I get back,' " gibes MacDonald. "They're still waiting for Custer." Under BIA-negotiated contracts, the Navajo receive a royalty of from 15¢ to 37¢ a ton for their coal; the going rate is between $1.50 and $2. As a result of those contracts, which last in perpetuity and have no escalation clause, MacDonald claims the 160,000-strong Navajo nation—a people with a per capita income of only $1,000 a year—is subsidizing the electric bills of Los Angeles and other subscribers to the Southwest utility grid that uses Navajo coal. MacDonald says the tribe should be getting five times its current annual revenues of $26 million—and tribal attorney George Vlassis has already filed 16 lawsuits (each one blessed by a tribal medicine man) to break the old contracts. "All we want is the fair market value for our resources," says MacDonald. "We have been gouged by the raw deals we find ourselves in, thanks to the U.S. government." Certainly, Washington cannot gainsay the other painful figures MacDonald publishes about his people: 45 percent are unemployed, and the infant mortality rate is twice the national average.

MacDonald's feisty, outspoken approach has won him many friends within the Indian community—and some enemies as well. Far from militant, he once ordered tribal police to arrest demonstrators from the American Indian Movement (AIM). He has also waged a running war with neighboring Hopi Indians. After MacDonald helped to kill a measure that would have resolved an Arizona land dispute with the Navajos in the Hopis' favor, Sen. Barry Goldwater stormed, in a horrendous gaffe: "There'll be red faces on the reservation over this." Some observers now link that threat to the subsequent federal indictment of MacDonald for fraud and tax evasion over an expense account scandal. The trial resulted in a hung jury, and charges were dropped. MacDonald says it was a political prosecution. "A lot of the old bureaucrats in Washington resent him," agrees an Energy Department official. "The knives are always out for MacDonald at the BIA because he is not jumping through the hoop for them. He refuses to be pushed around."

Nothing in MacDonald's background bred him to be pushed around by anybody. Almost from the time he could walk out of the hogan, he was put on a daily regimen of two-mile runs in preparation for a life of self-reliance. Trained first to follow in the footsteps of his grandfather, a medicine man, he entered his first English-language school as a 9-year-old first-grader (and took his Anglo name from the song Old MacDonald Had a Farm). Quitting at 15, he lied about his age to join the Marines in World War II and served in the South Pacific, where he transmitted radio messages in the Navajo language—a code the Japanese could not crack.

After the war MacDonald earned a high school equivalency diploma and enrolled in Bacone Junior College in Oklahoma. There, while already doing honors-quality work, he suffered the greatest—and most galvanizing—humiliation of his life when a required intelligence test scored him at "moron" level. So college officials forced him to retake his previous exams before witnesses to prove he hadn't cheated to get all those A's and B's. (A sociologist later showed that the pro-Anglo cultural bias of the tests had skewed MacDonald's test results.) After finishing a bachelor's degree in engineering at the University of Oklahoma, MacDonald became a crack engineer for Hughes Aircraft, where he headed a department working on the Polaris missile and moon-launch programs. After six years, at a financial sacrifice, he returned to the reservation, where his advanced education and political skill landed him the tribal chairmanship by a landslide in 1971. The job carries with it a $35,000 salary and the use of a car, plane and spacious house in Window Rock, Ariz., where MacDonald lives with his wife, Wanda, and their daughters Hope, 12, Faith, 9, and Charity, 7. (He also has two grown children from a previous marriage.)

Reelected last year to his third four-year term, MacDonald still has a lifetime of dreams. Already he has struck a new uranium deal with Exxon that allows the Navajos to act as partners in production, not merely as sellers, and in the not-too-farfetched future he anticipates the Navajos' own 50,000-barrel-a-day refinery; in-kind trading with Mexico (coal for oil, perhaps); government loans to help develop the unknown quantities of coal and oil still lying under CERT reservations—and the end not only of the BIA-negotiated leases but of the BIA itself. His ultimate goal is self-sufficiency for his impoverished, welfare-supported tribe, a strong, stable tribal economy and, in the long run, U.S. commonwealth status for an independent Navajo nation. He is both realistic—"We've seen Indian rights sacrificed to the national good before"—and indomitably determined. "Self-sufficiency isn't a dream," he insists. "It isn't pie in the sky. In 15 or 20 years we're going to make it happen."