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. Last Updated: 07/27/2016

President Keeps Up Heat on Chubais

Just two days after declaring an end to a book scandal that nearly brought down the Kremlin's top reformer, President Boris Yeltsin sent a flurry of mixed signals Thursday suggesting that Anatoly Chubais is not out of the woods yet.

The president lavished praise on two senior officials believed to be among Chubais' rivals in the Kremlin, and hinted that a replacement might eventually be found to run economic policy if things don't improve soon.

"I kept him on because now it's hard for us to find such high-level specialists," Yeltsin said in televised comments during a meeting with Prosecutor General Yury Skuratov.

During the meeting, Yeltsin praised Skuratov and his staff for having "cleared up" the book scandal in which Chubais and four colleagueseach accepted dollars 90,000 payments for a book on privatization that has yet to be published.

Three of Chubais' top allies in the Kremlin, referred to by Yeltsin as "the group of writers," were fired last week. Chubais was stripped of his position as head of the Finance Ministry, but allowed to keep the post of first deputy prime minister.

Yeltsin said he kept Chubais in the government only on the condition that he donate 95 percent of the dollars 90,000 book fee to a charity, which Chubais maintains he intended to do all along.

Yeltsin also met Thursday with Deputy Prime Minister and Interior Minister Anatoly Kulikov, who is viewed as one of Chubais' main rivals in the government. He gave Kulikov lengthy praise for what he said was the Interior Ministry's success in combatting crime and urged the media to tone down their constant criticism of Russia's police forces.

"One can say with confidence that people now feel safer in the streets than two or three years ago," Yeltsin said, citing government figures that crime is falling after years of increases that followed the collapse of the Soviet Union.

It is widely believed that the book story was leaked to the media by business tycoon Boris Berezovsky, who was fired from a senior Kremlin job early this month at Chubais' behest.

Some analysts suggested Thursday, however, that Yeltsin himself may have encouraged the disclosure to undercut Chubais and set him up as a possible future scapegoat.

Yeltsin's praise for the Skuratov's report on the book affair suggested that it was federal prosecutors who ferreted out details of the scandal on assignment from Yeltsin, said Yury Kurgunyuk, a political analyst with the INDEM research institute.

"He showed who is the master of the house -- like a monarch, a tsar, who is concerned about the solidity of his throne but not the affairs of the state," said Kurgunyuk, who likened Yeltsin to the proverbial Russian landlord who flogged his "serf actors and ballerinas" to remind them of his authority.

The next opportunity for such public flogging will be Monday, when Yeltsin has summoned the Cabinet to the Kremlin for a public report on its performance.

Chubais, widely regarded abroad as the force behind Russia's economic reforms, remains pivotal to Yeltsin's efforts to lure Western investment. He is handling the tough jobs of pushing the new budget through the opposition-dominated State Duma and making good on state-sector wage arrears.

The budget is stalled, however, and the government's chronic inability to collect tax revenues has jeopardized Yeltsin's promise to cover all wage arrears to state workers by Jan. 1.

Though Yeltsin on Tuesday insisted he "will not give up Chubais," some Kremlin watchers say that if economic conditions don't improve swiftly, Chubais could take the fall for the government's failures.

"For himself, Yeltsin already has parted with Chubais," said Yevgeny Volk, director of the Heritage Foundation's Moscow Office. "But he needs a person to be held responsible for the failure."

ORT television reported that Chubais met Thursday with the members of the Federation Council, parliament's upper chamber, to seek their support for the new budget.

He also moved to defend himself from allegations of corruption. Interfax said he had filed two libel suits: one against Echo Moskvy radio and journalist Alexander Minkin, who broke the book-scandal story; and a second against ORT television and ORT commentator Sergei Dorenko for the way they reported the case.


Chubais' lawyer, Mikhail Barshchevsky, said his client seeks 250 million rubles (about dollars 42,200) in damages from Minkin, 500 million rubles (dollars 84,4167) from Dorenko and 5 billion (about dollars 84,4167,000) from ORT.

Chubais wants a full retraction of Minkin's assertions that the dollars 90,000 book payment amounted to a hidden bribe from Uneximbank, which did we ll in auctions of state property overseen by Chubais. He also wants Dorenko to retract assertions of embezzlement, bribery and corruption.

Barshchevsky said he had materials that "completely disprove" the allegations.

Though Chubais' adversaries have hurled mud at him for several years, Barschevsky said, his client chose to file the suits only now that "his decency as an individual and as a citizen have been tarnished for the first time, his incorruptibility and personal detachment" brought under question.

Should the courts rule in Chubais' favor, he promised to donate the damages he would collect to the Fund for Support of Free Enterprise and Interests of the Middle Class led by former acting prime minister Yegor Gaidar. It is to the same fund that Chubais vowed to donate 95 percent of his exuberant honorarium.