Ten days that shook the Government

On Monday, President Vladimir Putin finally made up his mind about who he wanted in the new cabinet to keep his policies on course. 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.

The main thrust of the changes, however, was not only towards maintaining Putin's current policies, but to take steps further towards opening up the economy by using the Stabilisation fund more boldly.

German Gref, the Economics and Trade Minister, has been replaced by his deputy Elvira Nabiullina, who is seen as a market-orientated moderniser keen on cutting bureaucracy. She 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 Centre for Strategic Research.

She is one of two women to enter the cabinet, both attractive personalities in their forties. The other is Tatyana Golikova who takes over from Mikhail Zurabov as health and social development minister.

Golikova is the wife of Industry and Energy Minister Viktor Khristenko, and in another family affair, Putin refused to accept the resignation of Defence Minister Anatoly Serdyukov, who offered to quit last week because the new Prime Minister, Viktor Zubkov, is his father-in-law. Such familiarity is unusual in Russian politics and it comes as a surprise to many Russian people.

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, which is taken as a reference to the failed Implementation of some health social and pension policies. 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 if 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, according to Alexander Morozov, chief economist for HSBC in Moscow.

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, proving that his work in stabilising this volatile region has had some degree of success. He previously Instigated 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 named.

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