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. Last Updated: 07/27/2016

Canadian PM Sacks Rival Minister

OTTAWA -- Canadian Prime Minister Jean Chretien abruptly sacked arch-rival Finance Minister Paul Martin on Sunday amid one of the most dramatic crises in recent Canadian political history.

It was Chretien's second Cabinet shuffle in a week, demonstrating the turmoil his Liberal government is in as it faces allegations of corruption, and deals with the decade-old power struggle between Martin, 63, and Chretien, 68.

The sacking is likely to trigger a civil war within the party, especially if Martin decides to challenge Chretien at a Liberal leadership review set for February.

"Unfortunately, matters unrelated to governing have gotten in the way of our working together on government policy," Chretien said in a letter to Martin, his only finance minister since the party took power in 1993.

"As such, we both understand, with real regret, that it is in the best interests of the government and the country that you step down from the Cabinet."

Martin has been replaced by Deputy Prime Minister John Manley, who like Martin is on the fiscally more conservative wing of the Liberals.

Manley pledged Monday to continue the policy of balanced budgets and tax cuts for which Martin had won fame.

Martin commands wider support in the general population and in the Liberal caucus than Chretien does, and as such has been both an indispensable political asset and a threat.

Chretien decided Thursday to clamp down on the unofficial campaigns being run by those senior Cabinet ministers who want to replace him when he decides to step down, prompting Martin to make a shock announcement Friday that he was considering his future.

The prime minister, speaking outside the ceremonial hall where Manley was sworn in, said: "We did not fire him."

But Martin said he heard about the Cabinet shuffle on the radio and had intended to decide on his political future overnight before North American markets opened.

"In the last several months and particularly in recent days, the professional relationship between the prime minister and myself deteriorated to the point of becoming unproductive," Martin told a news conference.

Martin said he would stay on as member of Parliament.

Out of Cabinet, he is free to launch an all-out war against the more left-leaning Chretien, but he managed to skirt questions on that in the news conference.

The leadership review could easily turn into a bloody conflict between the two political titans who contested the party leadership in 1990.

With Martin's political organization dominating the party, he would have a good chance of denying Chretien the substantial support he would need to carry on.

Government sources said it was likely therefore that other contenders for the top job -- Manley, Heritage Minister Sheila Copps and Industry Minister Allan Rock -- would side with Chretien in a joint bid to spike Martin's guns.