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Scandal May Cost Kremlin Reformer His Clout

Russia: President Yeltsin will retain Chubais, architect of Moscow's privatization drive, for now. But he might jettison the aide for a budget deal.


MOSCOW — Anatoly B. Chubais has held many job titles in President Boris N. Yeltsin's Kremlin, and none has ever reflected the real extent of his power as the chief architect and engineer of Russia's historic economic transition.

But with his recent admission of impropriety in accepting a $90,000 book advance many here consider an ill-disguised bribe, Chubais may have lost more this time than his latest title. His retention in the leadership despite being touched by the book scandal will probably come at the expense of his authority to continue pushing through market reforms.

Yeltsin explained his decision not to fire Chubais as first deputy prime minister and finance minister as a choice between stability and scruples. Opting to keep in place his key economic strategist, Yeltsin nevertheless publicly upbraided Chubais for "impermissible actions" and left him a politically wounded man.

Yeltsin described Russia's current economic state as too turbulent because of the recent global market fluctuations to withstand a change in navigators. He and other Kremlin officials have also noted the need for continuity in managing the economy to get International Monetary Fund lending reinstated and a vital 1998 budget bill pushed through the legislature this week.

But Yeltsin has shown cunning skill in his handling of unpopular aides in the past, and his retention of Chubais despite the image-damaging scandal may indicate that the president simply wants to keep his options open.

Deputies to the Duma, the lower house of parliament, have already begun calling for Chubais' dismissal, and keeping on the man considered by Communists and nationalists to be the root of all Russian economic evil gives the president the option of trading the firing of Chubais for Duma approval of the budget bill.

"The book scandal will affect the passage of the draft budget for 1998 and tax laws," said Alexander N. Shokhin, head of the pro-government Our Home Is Russia faction in the Duma. He hopes that Yeltsin's political opponents will refrain from using the issue to extort concessions from the leadership, but he warned that the scandal "makes it hard to carry out [government] policy in the Duma."

Politicians have been speaking openly of the pressure Yeltsin will face to sacrifice Chubais for the sake of the budget by the time of its scheduled debate in the Duma on Wednesday. And those reformers left in the Kremlin seemed to be hinting to Yeltsin that the country can survive without Chubais.

"People used to think that if a reformer goes, a hard-liner will come to replace him and everything will change drastically, that the transition will be turned around 180 degrees," Alexander Y. Livshits, one of Yeltsin's key economic advisors, said in a televised interview. "Today, all of us who deal with economic policies are more like shift workers, like miners who are all working to get coal out of the same mine. . . . We all have pretty much the same qualifications and expertise."

Even if Yeltsin was to jettison the 42-year-old Chubais for the political expediency of getting the budget through the Duma, the president might find yet another way to resurrect him.

Yeltsin fired Chubais from his job as privatization chief in January 1996, a month after Communists and nationalists--buoyed by widespread popular dissatisfaction with market reforms--won control of the Duma in parliamentary elections. A few months later, Chubais resurfaced as head of Yeltsin's presidential campaign, and he was appointed Kremlin chief of staff in July 1996 after Yeltsin won an uphill battle for reelection.


Chubais and another brash young reformer, Boris Y. Nemtsov, were appointed first deputy prime ministers in March and have wielded powers far greater than their ostensible superior, Prime Minister Viktor S. Chernomyrdin.

Noting the shaky financial markets in Russia since the recent worldwide stock sell-offs, former prime minister and liberal economist Yegor T. Gaidar warned that keeping Chubais as chief economic strategist is essential to the country's future.

"There is no one who could replace Chubais. He is predictable, and markets hate unpredictability and instability," Gaidar said of the man who has served as chief executor of market economic reforms the two men crafted.

But it is the damage to that reputation that analysts have been citing as the reason Chubais may yet be ousted.

"No one likes Chubais, but for a long time many people believed that this unpleasant man was a very efficient machine," Russian Television news commentator Sergei Dorenko said, referring to Chubais' renowned skills for bulldozing through opposition. "The developments this autumn show that Chubais is not such an efficient machine and that his reputation has been a myth."

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