Ahead of the crucial presidential and parliamentary elections, Russian President Vladimir Putin announced on Monday the composition of the new government headed by Premier Viktor Zubkov.

Few changes were made, but Putin made a surprising decision by appointing presidential adviser Elvira Nabiulina in the seat of economics minister previously held by German Gref.

The unpopular minister of health and social development Mikhail Surabov was replaced by Tatyana Golikova, who is the second woman in the cabinet. Alexei Kudrin, the finance minister, became deputy prime minister, while Dmitry Kozak has been appointed minister for regional development.

Putin decided to keep deputy prime ministers Sergei Ivanov and Dmitry Medvedev in their seats, along with Foreign Minister Sergei Lavrov.

The Kremlin leader surprised once again when he rejected the resignation of Defence Minister Anatoly Serdyukov. Prime Minister Zubkov announced last week that his son-in-law, Serdyukov, will step down in order to avoid a potential conflict of interest.

“I expect the cabinet under the new head of government to discharge their strategic duties for the development of the country,” Putin said after naming the cabinet and announcing an increase in pensions as of October 1.

Almost two weeks ago Putin dismissed the government led by Mikhail Fradkov, saying the measure is aimed at preparing the country for the upcoming elections and the period which follows the presidential polls in March next year.

Putin astonished political analysts and media when he immediately named Zubkov as prime minister. Zubkov led the Federal Financial Monitoring Service of Russia since 2001, the institution having the mission to fight money laundering.

Observers speculated that the former financial crime investigator will present his candidacy for the presidential seat in March 2008, when Putin has to step down after serving two consecutive terms.

If Zubkov wins the election, Putin would allegedly remain in power from the shadows for a four-year period due to the close ties between him and Zubkov. Then he will be eligible to run for a third term at the country’s helm.