President Vladmir Putin promoted Finance Minister Alexei Kudrin to deputy prime minister and named his longtime ally Dmitry Kozak as regional development minister in the new Cabinet.
Economic Development and Trade Minister German Gref was replaced by his former deputy Elvira Nabiullina, while Deputy Finance Minister Tatyana Golikova took over from Mikhail Zurabov as health and social development minister. Golikova is the wife of Industry and Energy Minister Viktor Khristenko.
Putin refused to accept the resignation of Defense Minister Anatoly Serdyukov, who offered to quit last week because new Prime Minister Viktor Zubkov is his father-in-law.
The Cabinet otherwise was left intact, with First Deputy Prime Ministers Sergei Ivanov and Dmitry Medvedev and the other ministers keeping their positions.
Putin, however, did create a new federal agency on youth and revived the federal fishing agency, which was closed in 2004 after several corruption scandals.
Market insiders praised the new Cabinet. "These are good changes. The market will take them positively," said Al Breach, chief strategist at UBS.
Putin sighed before announcing the much-anticipated changes at a televised meeting with government officials in the White House. He began his speech by saying he had just signed a law on pensions. He then thanked outgoing Cabinet members for their work but said their efficiency had been declining on the eve of the State Duma and presidential elections.
"The problems citizens face today have to be solved efficiently and without glitches," he said.
Putin said the new Cabinet's work would be evaluated under a recently established set of criteria.
Kudrin, a longtime associate of Putin from St. Petersburg, will retain his position as finance minister together with the title of deputy prime minister. There are now three deputy prime ministers, with Sergei Naryshkin and Alexander Zhukov from the old Cabinet. It was unclear whether and how Kudrin would broaden his authority as a deputy prime minister. Kudrin's promotion could be a signal that the Kremlin supports the Finance Ministry's course, said Alexander Morozov, chief economist for HSBC in Moscow.
Nabiullina has a reputation of being a reformer capable of implementing her ideas, something that the Economic Development and Trade Ministry was recently having trouble doing under Gref, Morozov said.
Nabiullina played a key role in mapping out Russia's economic course at the beginning of Putin's presidency in 2000 and served as Gref's first deputy until mid-2003, when she left for the Center for Strategic Research.
Kozak returns to Moscow from Rostov-on-Don, where he has served as Putin's envoy to the Southern Federal District since being sent there after the Beslan school attack in 2004. He previously authored the nation's judicial and public administration reforms. He replaces Vladimir Yakovlev at the Regional Development Ministry.
Kozak's replacement as envoy to the Southern Federal District has not yet been determined, Interfax reported.
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