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. Last Updated: 07/27/2016

Chubais Survives, But Loses One Post

President Boris Yeltsin removed Anatoly Chubais, the scandal-ridden Kremlin economic-reform chief, from his finance ministry post Thursday and installed another liberal in good standing with the opposition-led parliament.

Chubais will keep his main job as first deputy prime minister, but State Duma Deputy Mikhail Zadornov, 34, was named the new finance minister.

The appointment was announced after Yeltsin and Prime Minister Viktor Chernomyrdin discussed a Cabinet shake-up meant to calm a storm over a book deal that many deputies felt was an ill-concealed bribe paid to Chubais and his allies.

"Now I ask deputies from of the State Duma and [Speaker] Gennady Seleznyov to close this topic," Yeltsin said in remarks broadcast on evening news programs.

Chubais, 42, will stay on as the Kremlin's point man on the economy. While losing an important brief as finance minister, he will retain overall control of the program he has crafted under Yeltsin.

As part of the shake-up, Yeltsin said deputy and first deputy prime ministers would no longer be allowed to hold other ministerial posts.

That means another key reformer, First Deputy Prime Minister Boris Nemtsov, 37, loses his post as fuel and energy minister. His No. 2 at the ministry, Sergei Kiriyenko, was appointed to take over.

Though Chubais' credibility was severely undermined by the scandal, in which he accepted $90,000 for helping write an as-yet unpublished book, his pivotal role in economic policy saved his job in the Kremlin.

Hastening to dispel suggestions that Chubais is in the doghouse, Yeltsin went out of his way Thursday to compliment the free-marketeer.

"He is smart. The world knows about him. We became members of the Paris and London clubs," Yeltsin said. "When the going gets tough, he helps out. This goes to his credit."

Analysts said Thursday that while Chubais wields less power now then before the book scandal broke last week, he has weathered the worst of the storm."Only a very short time will pass before Yeltsin decides that he needs Chubais more than ever," predicted Yury Korgunyuk, an analyst with the INDEM think tank.

Zadornov, a member of the liberal Yabloko faction in the State Duma, has harshly criticized the government and last month voted against its 1998 draft budget. But analysts say the liberal economist, who has headed the Duma budget committee since January 1994, should work well with Chubais.

"The Finance Ministry will no longer be under Chubais' strict control, but it should remain an agent of reform," said Sergei Markov, director of the Association of Political Consulting Centers. "For the budget, these changes are very good. Yeltsin chose a historic compromise that should institutionalize a line of compromise between the executive and the legislative branches."

If Yeltsin expected to win Duma support for the budget by promoting a deputy to the Finance Ministry, however, his gambit -- at least for now -- appears to have failed.

After wavering all week about whether to go ahead and vote on the draft in its first reading Friday, the Communists, who form the largest faction in the Duma, said they will postpone the vote, in part because they want to test Zadornov's mettle and perhaps win extra concessions.

Nevertheless, many in the parliament cheered the Kremlin shake-up.

"Zadornov is a qualified specialist," said Communist speaker Seleznyov. "He has shown himself to be a professional, so I think that the government has made the right choice."

The reaction was more subdued in the liberal Yabloko camp, whose members have long rebuffed invitations to join the government. Zadornov's departure means Yabloko will lose the chairmanship of the influential budget committee. The small but noisy faction, led by presidential hopeful Gregory Yavlinsky, dropped Zadornov from its ranks Thursday morning.

"He is working on his career, but it is difficult to be a finance minister in the government we have right now," Yavlinsky said. "Most likely, [his work] will be of little value. I hope he will manage to accomplish something or other."

Zadornov, while conceding he faces a difficult task of making Russia's financial ends meet, said he stood a fair chance to succeed.

"If I thought that I couldn't change anything, I would not enter the government, although I am perfectly well aware that my work will not be simple," Zadornov said.

Yabloko last month supported left-wing efforts to vote no confidence in the government. The faction criticized the government's proposed budget for being overly optimistic.

Thursday's reshuffle capped a week-long uproar over a $450,000 book fee paid to Chubais and four other current or former government officials involved in privatization. Three were fired at the end of last week.The payment came from a publishing house controlled by Uneximbank, which this summer won highly contested state property sell-offs overseen by Chubais and his allies.

Nemtsov's name was never dragged into the scandal, and his replacement as energy minister is seen as a close ally.

Some Moscow observers suggested that Chernomyrdin was behind the decision to ban senior ministers from holding dual posts. By taking some power away from Nemtsov, he undercuts a potentially powerful rival for the presidency in the 2000 elections.

"Splitting up the posts is twice as advantageous to Chernomyrdin," said Thursday's issue of Kommersant Daily newspaper.

While both Chernomyrdin and Nemtsov deny they hope to succeed Yeltsin as president, Russian observers say each is seriously weighing his chances.

"The very top of Moscow's elite is concerned with the question of succession, that it may be left standing without a single leader," the Obshchaya Gazeta weekly wrote Thursday. "Now it is undergoing a selection process."