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"You will have federal economic powers as deputy premier and ...a responsibility to tackle personnel, security and other issues [in the North Caucasus] as the envoy," Medvedev told Khloponin, 45.
Medvedev also said he had decided to gather North Caucasus provinces, Chechnya, Ingushetia, North Ossetia, Dagestan, Kabardino-Balkaria and Karachai-Circassia, into a separate federal district. Parliament is still to approve the creation of the new administrative unit, which Khloponin will oversee.
The appointment of Khloponin suggests the Kremlin is set to change its tactics in tackling the North Caucasus's economic backwardness, rampant militant violence and clan rivalry, which Medvedev has described as a key national security threat.
So far, most North Caucasus tsars appointed by Moscow have focused on beefing up security measures in the region.
"We don't need military strategists here," Ingush President Yunus-Bek Yevkurov, who survived a suicide car bomb attack on his motorcade in summer, said, commenting on the development.
"We need a manager, who will boost the economy and fight corruption. I think Khloponin will be up to the task," he said.
Khloponin is a former banker and board chairman of Norilsk Nickel who helped to overhaul the metals giant following the post-Soviet privatization campaign.
Since 2002, he has headed the Krasnoyarsk Territory, a vast Siberian province nearly four times the size of France. His gubernatorial term was marked with a fast economic growth in the region and a visible improvement in living standards.
Khloponin, one of Russia's richest men, has said he made his first money stonewashing blue jeans. He was named Person of the Year by Expert, a Russian business weekly, in 2002, and has been seen by many as a future prime minister or president. But he has denied harboring any political ambitions, joking that his "wife does not approve."
The Chechen president, whose republic witnessed two brutal separatist wars in the 1990s and early 2000s, welcomed the move to create a new federal district.
"I hope the creation of a separate [federal] district will help achieve economic objectives in the Chechen Republic and the region as a whole more efficiently and promptly," Ramzan Kadyrov said adding he looks to cooperation with the new envoy.
The Ingush republic's representative in the upper house of parliament, Vasily Likhachov, described Khloponin as a "crisis manager" for the region.
Medvedev highlighted a surge of violence in the mainly Muslim Caucasus republics in his state-of-the-nation address in November 2008, criticizing local authorities for their failure to curb poverty and corruption and pledging radical measures.
MOSCOW, January 19 (RIA Novosti)
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The current contract portfolio of Russian arms exporters is worth about $46 billion. Annual exports total $15 billion, and this will ensure uninterrupted deliveries for the next three years, even in the worst-case scenario. The list of the main buyers of Russian weapons is unlikely to change drastically.