The Midland Formula One team will break new ground in 2006 after getting the go-ahead to race under a Russian flag.
Shnaider's team will be English based but Russian registered
Midland, formerly known as Jordan, are now owned by Russian-born Canadian businessman Alex Shnaider.
"It was always our intention to enter F1 with a Russian licence," he said after the Russian Automobile Federation (RAF) approved the move.
"(The) decision pushes forward Russian motorsport's development and opens new horizons for Russian drivers."
RAF president Victor Kiryanov said he hoped this could usher in a new era for Russian motorsport.
"I hope that, some day, thanks to our joint efforts, Russian drivers will be racing and excelling in F1," he said.
F1 supremo Bernie Ecclestone, who has held talks with Russian authorities about the country hosting a Grand Prix, backed the decision.
"I am very happy that we now have in F1 a team with a Russian licence," he said.
"I am sure the Midland team will create interest not only in Russia but also worldwide."
Dutch driver Christijan Albers will race for Midland next season and is likely to be partnered by Portugal's Tiago Monteiro his likely team-mate.
Another Dutchman, Nicky Pastorelli, is the team's test driver.