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Yegor Gaidar: Economist and politician who oversaw the Soviet Union's transition to capitalism

Rarely has a great nation's destiny been entrusted to one so young as Yegor Gaidar. He was only in his mid-thirties when he was economics minister and acting prime minister of Russia, and he served in those posts for little more than a year, between 1991 and 1992. But in that short period, Gaidar's "shock therapy" – the removal of price controls, massive public-spending cuts and a first wave of privatisation – forced his country to make the horrendously painful but historically vital transition from the backward, non-functioning Soviet system into the modern capitalist era.

The credit crisis and recession of today may be nerve-wracking. But they are positively benign compared to the chaos that confronted Gaidar, amid the ruins of the Soviet Union. The system was not at risk of collapse; it had collapsed. Shops were empty, the currency was worthless and production had ground to a near-standstill. The choice lay between total state control, rationing and probable martial law, and the uncharted waters of the market. Gaidar unhesitatingly chose the latter.

"I was not absolutely sure that we would succeed," he told an interviewer in 1997. "But I was absolutely sure that there was no other way. And I was absolutely sure that delay would be suicide for the country." So, too, was his boss Boris Yeltsin, who knew that if unpleasant but unavoidable medicine had to be taken, it should be done at once.

In the process, Gaidar showed not just the courage of his intellectual convictions, but physical courage as well, in a country where he was widely loathed and with a tradition of random political violence. His policies unleashed an inflation that wiped out jobs and savings, and Russia's cities offered harrowing scenes of old and young lining the streets, selling what little they possessed to try to make ends meet. But those same policies put goods back on empty shelves, and set Russia's feet, however shakily, on the path to a market economy.

Yegor Gaidar was born into the Soviet version of aristocracy. His grandfather, Arkady, was a ferocious Red Army commander in the Russian civil war, and later a writer, who died fighting the Germans in the Second World War. His father Timur was a Pravda foreign correspondent who covered the Cuban missile-crisis and became a friend of the Castros. Gaidar's daughter, Maria, would continue the tradition, as a pro-democracy activist, a leader of the "Other Russia" and "Da!" ("Yes!") youth movement which is bitterly opposed to the autocratic Vladimir Putin.

After graduating from Moscow State University in 1978, Gaidar obtained an economics doctorate two years later, before becoming an editor of the party journal Communist. Under Mikhail Gorbachev, he was a supporter of perestroika, but gradually became convinced that the system Gorbachev was trying to mend was in fact beyond reform.

In 1991 he left the party, and joined the government of Boris Yeltsin's Russian Federation as economics minister, a post that became even more important after the demise of the Soviet Union on 25 December 1991. In June 1992 Yeltsin named Gaidar prime minister, but a hostile parliament refused to confirm him, and six months later he was replaced by the cautious apparatchik Viktor Chernomyrdin.

But Gaidar's loyalty to Yeltsin was unflagging. In the attempted coup of October 1993, he went on television to urge Moscovites to defend their elected government. Gaidar finally resigned from government in 1994, but remained an influential adviser of Yeltsin, before serving again as a deputy in the Duma between 1999 and 2004.

An undistinguished public speaker, and unaffected by the vanities of power, he was not a natural politician. Indeed, with typical mordant wit, he once described himself as a political "kamikaze". His office was modest and often untidy. His habits, apart from the love of food betrayed by his ample girth, were mostly frugal.

In November 2006, Gaidar was at the centre of a bizarre incident when he collapsed and was rushed to hospital in Ireland, a day after the death in London of the dissident Alexander Litvinenko, apparently poisoned by agents of the Putin government. Gaidar initially claimed he was victim of a similar assassination bid, but was fit enough to return home within 24 hours.

In recent years he wrote several books, including Collapse of an Empire: Lessons for Modern Russia (2007). His fear by then was that Russia might go the way of Weimar Germany, in which ultra-nationalist and authoritarian leaders would emerge in the wake of economic collapse and lead the country to disaster.

Rupert Cornwell

Yegor Timurovich Gaidar, economist and politician: born Moscow 19 March 1956; married Maria Strugatskaya (three sons, one daughter); died Moscow 16 December 2009.