Otto Graf Lambsdorff: Flamboyant West German economics minister who brought down Helmut Schmidt

Otto Graf Lambsdorff, as he was known, had the distinction of serving as economics minister in Helmut Schmidt's left-of-centre government from 1977 until 1982, and then in Helmut Kohl's right-of-centre coalition until 1984.

Coming from a family that traced its origins back to 14th century Westphalia, Lambsdorff was born in 1926 in Aachen, the westernmost city of Germany, located along its borders with Belgium and the Netherlands. Otto was a great-nephew of a foreign Minister of Czarist Russia and inherited the title of Graf, or count.

Although the family had lived in Russia for centuries, they were ethnic Germans. His father, Herbert Graf Lambsdorff, left Russia after the 1917 revolution and started up a business in Germany. Otto attended schools in Berlin and Brandenburg before being called up for military service as an officer cadet. He was 17; the war cost him his left leg. Returning from a British prisoner of war camp in 1946, he showed great determination, studying law and politics at the universities of Cologne and Bonn. In 1952 he was awarded a doctorate in law.

In 1951, Lambsdorff joined the Free Democratic Party (FDP), a party of influence rather than of the masses, with a tendency to split into factions. In the election that followed, in 1953, the FDP attracted 9.5 per cent of the vote, gaining 48 only of the 497 seats in the Bundestag, but it provided the President and five of the 30 ministers, its participation in government disproportionate to its modest size and vote.

At that time Lambsdorff was merely the chairman of the Aachen FDP, and from 1968 to 1978 treasurer of the party in North Rhine-Westphalia. In 1972 he was elected to the Bundestag for North Rhine-Westphalia and in Bonn became the FDP spokesman on economic affairs. He cut a striking, well-dressed figure, the German version of the English gentleman. His limp and cane added to this as he walked along the corridors of power in Bonn.

His big chance came in 1977 when he was appointed Economics Minister in the coalition formed by the Social Democrat Chancellor, Helmut Schmidt. He was one of five FDP senior ministers in the 18-strong team. At the Tokyo economics summit 1979, Margaret Thatcher found him to be an ally. "Apart from me," she said, "the strongest advocates of free market economics were Helmut Schmidt and, to an even greater extent, Count Otto von Lambsdorff."

However, the government of Schmidt was not free market enough for the Graf. In 1982, along with the Foreign Minister and deputy Chancellor, Hans-Dietrich Genscher, Lambsdorff was crucial in persuading the FDP to withdraw from Schmidt's Social Democratic-led government. West Germany had been hit by the turbulence in the world economy; many in the SPD wanted an expansion of public expenditure to beat rising unemployment, which stood at a 26-year high. Inflation had reached five per cent, high by German standards.

Lambsdorff advocated cuts in welfare budgets and more market- orientated policies. As a result Schmidt's government was replaced by right-of-centre Helmut Kohl's Christian Democratic-Free Demo-cratic government, with Lambsdorff and Genscher re-appointed to their old posts.

Lambsdorff was also active in banking and insurance from 1955. In 1972, he became a member of the Board of Management of Victoria Versicherung, a group of insurance companies in Germany. He was never far from the boardrooms of German business, and clearly got too involved with the Flick business empire. In 1984 he was forced to resign from government after allegations of corruption. Although the most serious charges failed, in 1986, he and his colleague Hans Friderichs were convicted of evading taxes by accepting illegal donations from the Flick concern and were heavily fined.

Many thought that would be the nd of the Graf but he managed to salvage his political career, serving on the Steering Committee of the Free Democratic Party from 1983 and becoming its chairman in 1988. He continued to represent the FDP as its chief economic spokesman up to 1997.

Lambsdorff was president of the Liberal International from 1992 to 1994. He was the chairman of the executive committee of the FDP's think tank, die Friedrich-Naumann-Stiftung, from 1995 to 2006. He also served as a board member of numerous companies.

In 1999, Chancellor Gerhard Schröder of the SPD appointed Lambsdorff to negotiate a compensation scheme for victims of Nazi forced labour with the US administration. A settlement involving billions of dollars was achieved and in 2000 he was praised by the US Deputy Secretary of the Treasury, Stuart E. Eizenstat, for his work.

"Count, your remarkable work here has added another chapter to a distinguished career," Eizenstat said. "He has been ever faithful, friendly even at the most difficult and tension-filled times, creative and indefatigable. Count Lambsdorff is a great German patriot who has done yet another great deed for his country."

David Childs

Only once during the years 1976 to 1979, when I was indirectly elected member sent to the European Parliament by the House of Commons, did I feel that any witness appearing before the budget committee or the budget sub-committee was overtly anti-British, writes Tam Dalyell. My British colleagues, the exceedingly sharp accountant Lord Bruce of Donington, and the very able accountant and budget reporter, the Conservative MP Michael Shaw, (now Lord Shaw), felt the same way about Otto Graf Lambsdorff. Moreover, we thought that he was the most opinionated man in all Brussels, in his zenith as German Economic Minister.

After one particular session in 1978 of the budget committee Lambsdorff grabbed hold of me and proceeded to harangue me on what he saw as the shortcomings of Denis Healey, the Labour Chancellor of the Exchequer at the time. I recounted the incident to the FDP budget committee member, later the European Commissioner for Industry, Martin Bangemann. Came the cryptic reply, "we in the FDP know that there were three great German Emperors in the 10th century – Otto I, Otto II, Otto III. We call Graf Lambsdorff our 20th century Otto."

On a rare occasion when he was in a mellow frame of mind I asked him why he was called Otto. It was because he claimed descent from Otto I. Ancestry really did matter. Later, a colleague of mine commiserated with Helmut Schmidt on Lambsdorff's defection to Helmut Kohl. "Are you surprised?" said the German chancellor, glumly.

Count Otto Lambsdorff, politician and businessman; born Aachen 20 December 1926; married 1953 Renate Lapper (one son, two daughters), 1995 Alexandra von Quistorp; died Bonn 5 December 2009.