When the state of Arizona put Proposition 106 on the ballot last fall, Peter MacDonald Sr. campaigned vigorously against it. Nonetheless, voters approved the referendum, which declared that English is the "official language" of Arizona.

At that point, MacDonald declared that Proposition 106 would have no legal effect in the sizable chunk of Arizona where he holds sway. Just to rub it in, MacDonald announced that the hundreds of English-language geographical names in his part of Arizona would be translated into his official language. He said, for example, that Window Rock henceforth should be known as "Tseghahoodzani."State officials in Phoenix are still trying to figure out whether MacDonald has authority to do that.

MacDonald himself expresses no doubt.

He is, after all, duly elected chairman of the Navajo Indian Tribe, a legal entity recognized by Congress in an 1868 treaty as a "Sovereign Nation." This nation within a nation has its own capital, national park, parliament, supreme court, tax code, flag, language, and even its own police force - the subject of mystery novels by Tony Hillerman featuring Jim Chee, a fictional Navajo Tribal Police sergeant.

For more than a week, Senate subcommittee hearings have focused new attention on the Navajos and MacDonald, their dominating political leader. Here on the reservation, many Navajos express concern that alleged fraud by him may be the only thing that most Americans know about the tribe. "There is much more to the Navajo than that," Tribal Council member Percy Deal said.

In the 120 years since a starving, ragtag remnant of the tribe was herded by Indian fighter Kit Carson along the infamous "Long Walk" to a federal prison camp in New Mexico, the Navajos have demonstrated such talents of endurance and adaptation that they have become America's largest and richest tribe.

The 25,000-square-mile Navajo Reservation is a spectacularly scenic expanse of red, pink, orange and khaki-brown desert that millions of Americans have seen in such John Wayne Westerns as "Stagecoach" and in television commercials featuring a car perched atop an impossibly steep spire of rock. Scratching out an existence on this dusty, unforgiving land are about 200,000 members of the tribe whose physical appearance is captured in a Navajo poem: "My skin as brown as the face of Mother Earth, my hair as black as the sky of night."

A strongly spiritual people with a rich religious heritage and mystical bond to their land and animals, Navajos resemble the Japanese in their skill at melding traditional culture with new ideas borrowed from elsewhere.

The mix of old and new is evident everywhere. Disc jockeys intersperse the Beach Boys with recordings of tribal chants and pot-drum solos, then break for Navajo-language commercials touting bargains on chain saws or pickup trucks. Rounding a hilly turn on a remote stretch of reservation highway, a visitor might see an old rancher tending sheep on horseback while his sons pursue the strays on all-terrain four-wheelers.

Because the parched, rocky soil makes life so hard, Navajo Country is one of the most sparsely populated regions in the United States. The reservation covers an area larger than Massachusetts, New Hampshire and Vermont combined but has only one town, Shiprock, N.M., with a population greater than 3,000.

The locals brag about "big cities" that would not even make a county map in most places. Beginning 25 miles from the Gray Mountain Trading Post, north of Flagstaff on Rte. 89, highway signs boast of the major settlement that lies ahead. "Gray Mountain!" they proclaim, "TWO stores. TWO gas stations."

Unadvertised, because all Navajos know that it will be there, is a standard feature of every trading post in a land where water is dear and cleanliness crucial: the local self-service laundry.

The Navajos, known in their own language as "Dineh," or "The People," have developed an intense devotion to this difficult land although they are relative newcomers to the Great Basin of the American Southwest.

The nature of the country is reflected in names Navajos have placed on their scattered settlements: Sandy Spring, Castle Butte, Rough Rock, Window Rock, Spider Rock, Hard Rocks and, in the middle of nowhere, Lonely Frog Rock.