In a resignation letter to President Boris Yeltsin, Mr Gaidar declined to stay on as first deputy prime minister, saying 'more and more decisions' had been taken without, or in opposition to, his advice: 'I cannot stay in the government and at the same time oppose it.'
His letter, which singled out recent decisions to spend dollars 500m ( pounds 337m) on a new parliament building and form a currency union with Belarus, suggested he would also quit the post of Economics Minister: 'We are not rich enough to sacrifice the welfare of Russian citizens to political considerations.'
The Social Security Minister, Ella Pamfilova, a Gaidar supporter and the only woman in the cabinet, said she was also resigning. 'It is simply an act of despair,' she said.
Mr Gaidar's departure, which may be followed by that of the Finance Minister, Boris Fyodorov, is the first concrete sign that, despite repeated promises to the contrary, a surge by Communist and nationalist parties in last month's parliamentary elections is forcing the Kremlin to rethink economic policy and has shifted the balance of forces within a divided cabinet.
It was Mr Gaidar, the 37-year-old darling of Western governments, who led the reformist alliance, Russia's Choice, to an electoral debacle under the slogan 'Others talk, he acts'.
His resignation suggests a growing rift between young, westernised reformers and President Yeltsin, who remained aloof during the election campaign and who, since the election, has offset promises of reform by emphasising the need for a more 'socially orientated' course.
A new cabinet reflecting the outcome of the December election is due to be announced this week. 'I believe we have reached a turning point,' said Mr Fyodorov, who may leave his post as Finance Minister after losing a long battle to oust Viktor Gerashchenko as chairman of the Central Bank.
But with theatrical brinkmanship a frequent element of Russia's volatile political scene, Mr Gaidar's walk-out seems less than irrevocable and Mr Fyodorov's far from certain. President Yeltsin's spokesman, Vyacheslav Kostikov, urged Mr Gaidar to reconsider, saying his absence would 'seriously weaken the President's reformist flank'. Interfax news agency reported that Mr Yeltsin would meet the Prime Minister, Viktor Chernomyrdin, today to discuss the matter.
Widely cited yesterday as a possible replacement for Mr Gaidar was Grigory Yavlinsky, co-author of the still-born '500 Day' programme, Mikhail Gorbachev's last flirtation with radical reform. Mr Yavlinsky, a firm advocate of the market, has engaged in a long-running slanging match with Mr Gaidar and contributed to a public perception of constant bickering in reformist ranks. Such infighting last week allowed a Communist bureaucrat, Ivan Rybkin, to waltz into the post of State Duma speaker.
Whether or not Mr Gaidar returns will not alter the fact that economic change will follow a more cautious course. Privatisation is expected to surge ahead but controls on government spending seem certain to slip. A sign of this is the money allocated to build a new parliament which, according to Mr Gaidar, amounts to five times the entire federal budget for art and culture. The old legislature, the White House, shelled by tanks during the rebellion last October and then refurbished at huge expense, has been turned over to the government on Mr Yeltsin's orders.Reuse content