A man for reform

Yegor Gaidar will be remembered as one of the young economists who, surrounding Boris Yeltsin’s government, were the midwives who managed the difficult delivery of the modern Russian state.

But he was as much a product of the old establishment that he did away with as of the reforming liberalism that he came to exemplify. An economist by training, he began his career as a researcher at several academic institutions. But like many young men with an establishment background, he was also a member of the Communist Party of the Soviet Union, editing the economy section of the party journal Communist in 1987-1990.

Why Yeltsin plucked Gaidar from relative obscurity to serve as his deputy prime minister for economic issues is not entirely clear. One explanation is that Yeltsin was attracted by the young team of supporters he brought with him. “I think Yeltsin recognized he was a very active person,” said Gaidar’s former assistant Nikita Maslenikov. “And Yegor was prepared to take responsibility before Yeltsin. That, too, was important.”

Gaidar went on to become Yeltsin’s finance minister and then, in June to December 1992, his acting prime minister.

Despite his apprenticeship in Soviet academic economics, Gaidar was a convinced free-market liberal.

But his own role in the introduction of capitalism to Russia was far more controversial. He and the other young reformers in Yeltsin’s first cabinet presided over what became known as “shock therapy”, the rapid release of price controls advocated by the American economist Jeffrey Sachs.

The young reformers managed to slash the budget deficit and introduce a market economy, but the reforms were also accompanied by hyperinflation and economic hardship comparable to the Great Depression. Enterprises across the formerly state-subsidised economy haemorrhaged jobs as they struggled to adapt to the market environment, and the liberalisation of prices in January 1992 and adjustment of the exchange rate revealed the fundamental weakness of the rouble, with the result that many Russians found the value of their savings simply wiped out. Those whose names were associated with the reforms became objects of ridicule and even hate. A poll in 2007 found some 58pc of Russians had a negative attitude to the reforms.

It is certainly true that many of Gaidar’s most controversial moves, including the cancellation of price controls were “inevitable”, said Leonid Grigoriev, a prominent economist who briefly served alongside Gaidar in the Yeltsin government. “And price controls had already largely been lifted by the last Communist government – it wasn’t one shock,” he added. But whether Gaidar and his supporters’ reforms caused the economic nightmare of the early 1990s with their reforms, or whether the chaos was simply the result of decades of economic mismanagement during the Soviet Union, is still a matter of academic debate. But the economic reforms that Gaidar is mostly remembered for occurred alongside no less dramatic political reforms. And regardless of how well thought-out his economic policy was, he does deserve credit for the fact that Russia’s transition from Communism was both lasting and relatively bloodless. Prime Minister Vladimir Putin, who has largely built his political reputation on repudiating the carelessness of the Yeltsin-era reformers, praised Gaidar for his “integrity and courage”. “Not every public figure is called upon to serve his country at the most critical stages of its history. Yegor Gaidar honourably discharged this challenging task, displaying the best personal and professional qualities,” Putin said in a telegram to Gaidar’s most high-profile part in keeping the peace came in 1993, when he appealed to Muscovites to support the government during the constitutional crisis that had brought the country dangerously close to civil war. “He did what he considered right. He was extremely courageous in what he was doing. Even fearless,” said Grigoriev.

Roland Olophant is Russia Profile magazine political analyst.

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