YEKATERINBURG, Russia -- Set on the Ural mountain  divide between Europe and Asia, this city has long been at  the crossroads of Russian history.

Russia's last Czar was executed in Yekaterinburg. President  Boris N. Yeltsin began his political career here as a Communist  Party boss. And the local military still boasts of its cold war role  in shooting down Gary Powers's U-2 spy plane.

But Yekaterinburg is best known these days for the protest that has rocked the nation's most trusted institution: the Russian Orthodox Church.

Yekaterinburg's powerful Bishop has been accused by local priests of rampant corruption, book burning and sexual impropriety. The bitter duel  among the clergy has begun to resemble the rough and tumble of Russian politics.

Dissident monks have been evicted from their monasteries. CD-ROM's with Kompromat, or  compromising testimony, have been distributed to the scandal-hungry news media. Protesters have marched to the stately residence of Bishop Nikon to  demand his removal.

The revolt in Yekaterinburg, the church's third most important diocese,  has not only been a feast for the nation's tabloid press. It is also  presenting a major challenge to Russian Orthodox leaders in Moscow.

Short of priests, strapped for money and facing an overwhelmingly  secular society, the church is already involved in a difficult struggle to  establish itself as a moral voice in post-Communist Russia and attract  a new generation of believers.

Its cautious response to the scandal has fortified criticism that the  church -- still haunted by ancient schisms -- is more preoccupied  with avoiding splits in its upper ranks than in rooting out corruption.

"Church unity is an important thing, but I do not think such a high  price should be paid for this unity," said Father Ilarion Alfeyev, an  Oxford-educated official of the Patriarchate. "It is not just one or two  priests who accuse the Bishop. It is more than 50."

"My personal position," he added, "is that as long as the evidence is  clear, and it seems to be clear, the church has to make a disciplinary  decision. It is very important for the church to try as hard as it can to  purify itself."

Even before the Yekaterinburg scandal, the church faced enormous  obstacles in re-establishing itself.

Russia still has its share of die-hard Communists who want nothing to do  with religion. And Russians who do believe in God now have a multitude of  religious movements and esoteric sects to choose from.

The church also spent 70 years surviving in the shadow of the officially  atheist Soviet Government, which arrested and executed many priests  and set the boundaries within which those who survived were willing  or supposed to operate. When the Soviet Union imploded, the church  found itself with an enormous amount to do and little to do it with.

"The church has grown despite an extremely disruptive situation," said  Father Leonid Kishkovsky, a leading priest of the Orthodox Church in  America who regularly consults with Russian church leaders. "Every  element of what they need -- books, icons, even clergy -- is in shortage.  And yet they have managed."

Church Raises Money in Questionable Ways

But like other institutions trying to find their way in post-Soviet  Russia, there have been missteps.

Financing has been a big worry. Thousands of churches and monasteries  that were confiscated by the Bolsheviks have been returned, but they  need millions of dollars in repairs.

Since the overwhelming majority of Russian believers are poor and  there has been little direct Government support, the church has  sometimes turned to questionable ways of raising revenue -- at  considerable cost to its reputation.

Father Vsevolod Chaplin, the spokesman for the Moscow Patriarchate, acknowledged in an interview that the Russian Government had indirectly helped the church by allowing it to bring tobacco and alcohol into the country tax-free. The goods were designated as "humanitarian aid."

The church turned the cigarettes and liquor over to private companies, which sold them and shared their profits with the church. Father Chaplin said the practice -- roundly criticized by the Russian press -- has been stopped.

The church's finances, however, are still secretive. Not even church  leaders in Moscow necessarily know what fund-raising arrangements  are being worked out in the church's name.

The lack of qualified priests has also hampered the church's efforts to  attract a new generation of believers.

"At the beginning of perestroika, there were a little over 6,000 parishes  across the entire Soviet Union, and now the church has over 20,000,"  said Anatoly Krasikov, the director of a Moscow-based institute on  church-state relations and a former press aide to President Yeltsin.

"But the priests had to be trained quickly," Krasikov added. "They know  how to conduct the service but they often have no true theological  education. They often can't answer the questions of believers, and many  people who started to come to church quickly became disenchanted."

Certainly, many Russians have turned away from the church after an  initial flurry of baptisms, church marriages and attendance at religious  services. Father Chaplin of the Moscow Patriarchate estimates that about  5 percent of Russians regularly attend church, though some priests  say even that may be an overestimate.

The situation of the church in Yekaterinburg has not been any easier.

At Father Vladimir Zyazyev's church in the Uralmash factory district,  several women came to light candles in front of the icons and venerate  the relics of Orthodox saints kept near the altar.

Father Zyazyev said he planned a 24-hour telephone line for those who  have questions about the church or are seeking counsel. He acknowledged  that the Orthodox Church had much to do to reach out to society.

"There is only one Orthodox church for every 80,000 people in the city of Yekaterinburg," Father Zyazyev said. "In the old days, there was one  church for every 1,000 people."

"It is essential for us to have 500 new priests in our region alone," he  said. "Then we could somehow speak of our influence."

A Soviet Style Mentor Helped Bishop Rise

But instead of expanding its appeal, Yekaterinburg's church has been drawn into a web of intrigue since 1994, shortly after Bishop Nikon took over the diocese.

Born in Altai, a mountainous region near Kazakhstan, Bishop Nikon owed  his career to a powerful Soviet-style mentor.

As a young man, he worked as a bookkeeper before finding a job in a  church candle shop in Irkutsk, Siberia. There he met Metropolitan Mefody,  a contentious figure who has been accused by some churchmen of links to  the K.G.B., or Soviet secret police.

After being ordained into the church, the former bookkeeper worked for  the cleric for well over a decade. With the support of Metropolitan Mefody,  the Holy Synod appointed him Bishop of the Yekaterinburg region, an  almost unheard-of promotion for a clergyman of just 33.

Yekaterinburg is not just another diocese. It includes the ancient town  of Verkhoturye, a 400-year-old pilgrimage site famous for its cathedral  and monastery.

It is also the place where the imperial family was killed.

Grand Duchess Elizabeth, a sister-in-law of Czar Nicholas II famous for  her piety, is the only Romanov to be canonized by the church. A monastery  named after the New Martyrs of Russia is being built near the town of  Alapayevsk, where she was thrown down a mine shaft by the Bolsheviks.

A church in Alapayevsk itself was one of those never shut down by the Bolsheviks -- part of the uneasy accommodation between the Orthodox  Church and Communist authority. On a recent feast day of the Nativity  of St. John the Baptist, a devout group of parishioners -- mostly elderly  women and children, with a sprinkling of young men -- stood through a  long liturgy, apparently oblivious to the political storm over the  administration of their diocese.

While bishops have enormous leeway in administering their dioceses, such important appointments have not always received a lot of scrutiny.

"In the Roman Catholic Church it is not that easy to become a bishop,"  said Father Alfeyev, the Moscow Patriarchate official. "There is a special  commission that selects people and follows their personal development.  But in our case there is no clear picture. They might be under someone's  protection. I don't think the Holy Synod has enough time or means to  actually investigate someone's personal life and behavior in a very detailed  way."

Bishop Nikon and his spokesman declined to be interviewed for this  article.

At first, Bishop Nikon was seen as an energetic leader. Soon, however,  the diocese became a battleground.

Local priests say that the Bishop pressed their strapped parishes to  turn over icons, robes and silver chalices. They say he demanded  huge fees for resolving administrative matters. And they complain  that he ordered parishes to buy all of their church goods from the  diocese and then raised the prices.

"People were shocked that candles become so expensive," said Father  Foma Abel, a priest in Nizhny Tagil, a dingy factory town in the  Yekaterinburg region. "This really hurts the believers."

For months, the priests grumbled among themselves, but the dispute  heated up when the dissenters accused the Bishop of drunkenness  and of openly practicing homosexuality.

At the same time, the diocese received some unflattering publicity  abroad after it was reported that Bishop Nikon had approved a plan  to confiscate books at a local seminary by two American Orthodox  theologians, Father Alexander Schmemann and Father John Meyendorff,  and by Father Aleksandr Men, a liberal Russian Orthodox priest who was  axed to death in 1990. Some of the books were even burned.

 A Fact Finding Team Supports the Bishop

Finally, the priests decided to take their complaints to Moscow. It  was a fateful step, but not one that turned out the way the protesters  expected.

In Soviet times, the church could not make any administrative decisions  without the approval of the state. But now that the Holy Synod has the  right to run its own affairs, it has often sought to avoid open  disagreements.

After Father Tikhon, the abbot of a monastery in Verkhoturye, and Father  Avraam, the abbot of a monastery in Yekaterinburg, met with the Patriarch,  the church dispatched a fact-finding commission to Yekaterinburg in January.

Headed by one of the Patriarch's top aides, Metropolitan Sergei, it  found no grounds to remove the Bishop, but the church did punish the  dissenters. When the dissenters continued their appeals, the Holy Synod  issued an order in April removing them from their monasteries, some  protesters say, for so persistently challenging their Bishop.

In Soviet days, a decree from on high might have silenced the debate.  But the church authorities in Moscow seemed to misjudge the depth of the  opposition against the Bishop and the willingness of the priests to carry  on their protest according to the rules of the new, post-Soviet Russia.

Eleven parishes proclaimed they would not accept the Bishop's authority.  The dissenters also took their case to the press, which published salacious  accounts of the Bishop's alleged behavior.

Soon, it seemed, it was the Moscow Patriarchate that was on trial.

Seeking to quiet the embarrassing dispute, Metropolitan Sergei pressed  the protesters to stop their media campaign and formally repent for  continuing with their appeals or risk losing their position, some of the  dissenters say.

Despite repeated attempts, Metropolitan Sergei could not be reached for comment. Father Chaplin, the spokesman for the Patriarchate, said the  church was doing its best to untangle the situation.

"There is a group of priests that is accusing the Bishop of all the  deadly sins," Father Chaplin said. "On the other hand, there is  some evidence that these priests have a certain economic interest.  So I think the hierarchy will continue to study this situation. A  bishop is quite autonomous in his diocese."

Father Abel said, however, that the church appeared to be worried that  the removal of Bishop Nikon might invite similar protests elsewhere.

"They are afraid of large-scale protests and think this could be a  precedent where there are also problems," he said. "The hierarchy  thinks we have harmed the church more than all the Nikons put  together. So it is not just the problem of Nikon that must be solved.  It is also us."