Thwarted in his bid to be Iraq's leader, one-time Pentagon favorite Ahmad Chalabi (search) has nevertheless captured a key position in the new government — a deputy prime minister's spot and temporary control of the lucrative oil ministry.

With his nephew also installed as finance minister, Chalabi and his family appear to have a firm grip on the country's purse strings.

Once Saddam Hussein's (search) most visible opponent in exile, Chalabi, 60, is now tasked with overseeing the world's second-largest proven crude reserves until a permanent chief is found. Oil is the country's only major source of export earnings, crucial to rebuilding Iraq's devastated economy.

It was a spectacular comeback for the Shiite Arab lawmaker, who fell out of favor with Washington over accusations he leaked intelligence to Iran (search) and supplied flawed evidence that Saddam was hoarding weapons of mass destruction.

Iraq's interim parliament approved a partial lineup for the new government on Thursday, leaving seven posts — including the oil ministry — to be decided later.

There is still no word on when those positions will be filled. But whether Chalabi remains in charge of oil for months or a week — all eyes will be on him.

"Having two close members of the same family in two key economic ministries may raise questions for the Iraqis and those who want to do business in Iraq," said Judith Kipper, director of the Middle East Forum at the New York-based Council on Foreign Relations.

Chalabi's checkered career is already tainted by allegations of corruption.

In Iraq, he faces a suspended charge of counterfeiting for allegedly reproducing old Iraqi dinars removed from circulation after Saddam's ouster. He was never arrested because the Interior Ministry refused to follow up on the warrant.

He is also still wanted in Jordan for a 1992 conviction in absentia of embezzlement, fraud, and breach of trust after a bank he ran collapsed with about $300 million in missing deposits. He was sentenced to 22 years in prison — but hasn't served a day.

The Jordanian government welcomed the new Iraqi Cabinet on Thursday but resisted commenting on Chalabi's latest political triumph.

Jordanian government spokeswoman Asma Khader said it was an "internal Iraqi matter and we respect the will and the opinion of the Iraqi people."

Chalabi would not comment Thursday.

The incoming finance minister, Ali Abdel-Amir Allawi, 58, was a consultant to the World Bank and headed a London-based investment company called Pan-Arab. Like his mathematician uncle, he is an MIT graduate. But his supporters play down his ties to Chalabi, noting he is also related to outgoing Prime Minister Ayad Allawi (search).

"The allegations against Chalabi will not affect him," Shiite alliance lawmaker Saad Jouwad Qandil said of Ali Abdel-Amir Allawi.

Chalabi's standing with Iraqis was tenuous when he returned home in 2003 under the patronage of the United States. Using a private militia, he took over an exclusive social club in an affluent Baghdad suburb and made it the headquarters for the Iraqi National Congress, the anti-Saddam movement he headed in exile.

Since then, Iraqi security forces have raided his offices and militants shot at his convoy.

Chalabi's return from political exile began to take shape when he volunteered to mediate a truce with radical Shiite cleric Muqtada al-Sadr (search), whose militia battled U.S. troops in two separate rebellions last year. Left out of the interim government by then U.S. administrator L. Paul Bremer, Chalabi decided to build his support base among other Shiites.

Chalabi promised that if he became prime minister, he would drop murder charges against al-Sadr. He also spearheaded a drive against members of the former regime who had returned to positions in the interim government.

Some members of the interim legislature said they were prepared to give Chalabi the benefit of the doubt. But "if there is evidence that all the accusations are right, our stand will change," Qandil said.

The outgoing government is bedeviled by allegations of corruption within its ranks. With fresh elections slated before the end of the year, analysts warn some incoming officials could be tempted to use their short time in office for maximum financial gain.

"The day that the new government takes over a new test begins for everyone," Kipper said. "This is an absolutely critical period for the future of Iraq, and we have to see who in the Cabinet is going to look forward for Iraq, and who is going to be concerned with their personal success."