Russia's finance chief resigns

IN THE biggest blow yet to Russia's new prime minister, Sergei Stepashin, one of his top two deputies resigned yesterday, less than a week after being appointed.

The resignation of First Deputy Prime Minister Mikhail Zadornov marked the second power struggle Mr Stepashin has lost since being appointed by President Boris Yeltsin just over two weeks ago, and led to speculation that Mr Stepashin might be next to go.

Although his new post was a promotion, Mr Zadornov also had wanted to maintain control over the finance ministry, which he had headed in the past three governments. "My stance is that the finance ministry should play a key role in the government," he told reporters, explaining the government needed a "unified economic bloc" to realise its main economic tasks. "Unfortunately, my position did not find support from the president or his administration staff and today I tell you that I have to resign."

Later, in an interview on NTV television, Mr Zadornov said he had not been able to speak directly with Mr Yeltsin.

Mr Zadornov had been a strong proponent of reform in the government, and he spoke with pride yesterday about his ministry's achievements, including keeping the government within its budget for the past eight months.

His departure is a second, visible defeat for Mr Stepashin, whom Yeltsin appointed prime minister on 12 May after sacking Yevgeny Primakov.

Mr Stepashin had proposed Alexander Zhukov, head of the budget committee in the lower house of parliament, be made first deputy premier in charge of economic policy, and that Mr Zadornov remain at the helm of the finance ministry. But Mr Yeltsin rejected that recommendation.

Both the newspaper Vremya and Interfax news agency predicted that Mr Stepashin might be next to resign.