MOSCOW (AFP) - Russian President Dmitry Medvedev merged Tuesday seven mostly Muslim regions into a new district and appointed a powerful new envoy in a bid to boost development to the troubled area. The reform reorganised the Kremlins control over its southern region, separating out the North Caucasus area, where Moscow is battling a low-level Islamist insurgency, from more stable parts. Medvedev appointed as envoy of the area, which includes Chechnya, the current Governor of the Krasnoyarsk region, Alexander Khloponin, who will also hold the title of Deputy Prime Minister under Vladimir Putin. A document was signed by me today... appointing you as the presidential envoy to the North Caucasus federal district, Medvedev told Khloponin, 44, in comments broadcast on state television. The new federal district includes Chechnya, Dagestan, Ingushetia, Kabardino-Balkaria, Karachayevo-Cherkessia, North Ossetia and the Stavropol region with its regional capital in Pyatigorsk. Khloponin, a former businessman and trained economist, served on the board of directors of Norilsk Nickel from 1996 to 2001. He was elected Governor of Krasnoyarsk region in 2002 and is a member of the ruling United Russia party. Medvedev hailed Khloponins successful experience in Krasnoyarsk and said he hoped his appointment would boost economic development in the North Caucasus, where unemployment is rife and a low-level insurgency has picked up in recent months. So far our economic projects are proving very difficult. There is mass unemployment, economic crimes and bribe-taking, Medvedev said, acknowledging that Khloponin faced a very difficult task. The President previously had different envoys to the seven federal districts.