Yitzhak Shamir, who has died aged 96, was a former terrorist who, a little to his own surprise, found himself Prime Minister of Israel in 1983.

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© AFP/GETTYYitzhak Shamir in 1991
He only entered the Knesset in 1973, when he was nearly 60, as a member of Menachem Begin's Herut party (which was later to merge with other right wing groups to form Likud). In 1977 he was elected Speaker and three years later he became Foreign Minister.

It was a curious appointment, not only because had he never held any ministerial office before, but also because he differed profoundly from Begin on perhaps the key element in his foreign policy, the 1978 Camp David Accords which led to peace, the following year, between Israel and Egypt.

Moreover, Shamir was a virtually unknown quantity, for his past was shrouded in mystery, but that, if anything, helped, for it gave him something he otherwise lacked, a certain amount of glamour.

The Foreign Ministry seemed to make him heir apparent to Begin, although they were almost exact contemporaries and Begin had no immediate or even distant plans to retire. But then, in August 1983, about a year after the invasion of Lebanon, Begin suffered a nervous collapse and resigned. David Levy, who was Deputy Prime Minister, made a bid to succeed him, but was easily beaten by Shamir. He had got to the top in a mere 10 years without any apparent effort to get there, and his whole career suggests that advancement is dependent less on ability than on being in the right place at the right time.

Yitzhak Shamir was born Yitzhak Yernitsky on October 15 1915 in Ruzinoy. Like Begin he was a Pole. Like Begin he spent his youth in the right wing Zionist Revisionist party. Both men studied Law at Warsaw University, and both were tough and tenacious, but there the similarities stopped. Begin was a cultivated man and a great orator with something of the urbanity and grace of a Polish gentleman. Shamir was not, though his forceful, aggressive manner of speech had it own compelling qualities.

There was nothing about him to suggest culture or learning, though in the course of his peregrinations - some of them enforced - he had picked up several European languages. He was short, but powerfully built, like a sawn-off all-in-wrestler, and had the thrusting rapid stride of a man who knew where he was going and was in a hurry to get there. But he was not without charm and had a grim little smile, like a flicker of sunshine breaking through a wintry sky.

He went to Palestine in 1935, studied at the Hebrew University, worked for a time as a building labourer and bookkeeper, and, after the 1936 Arab riots, joined the Irgun Zvei Lumi.

While Haganah, the defence arm of the Zionist movement, was concerned merely to repel attacks, the Irgun was determined to go over to the offensive. Haganah, moreover, only confronted the Arabs, while Irgun was also prepared to take on the British administration. When the Second World War broke out, however, the Irgun called a truce. Shamir moved over to the Stern Gang, which continued the struggle with the British as if Hitler had never existed.

In 1941 Shamir was arrested and imprisoned in Acre, but he escaped a year later. Avraham Stern had been killed some months previously and Shamir helped to reorganise the gang and became chief of operations.

With him in this leading role, the gang attempted to assassinate Sir Harold MacMichael, the British High Commissioner, in August 1944. Three months later its members murdered Lord Moyne, British Resident Minister in the Middle East. Shamir was said to be involved in both operations, and according to an associate of those days, Israel Eldad, he was directly implicated in the murder, in September 1948, of the Swedish count, Folke Bernadotte, who was the UN mediator in the Arab-Israel war. The fact is that the Stern Gang never had more than about 100 members, and as Shamir was a key figure, he probably had a hand in all three.

In 1946, after Irgun bombed the King David Hotel, killing 91 people, Shamir was rounded up with numerous other Jewish underground leaders and interned in Eritrea. But he escaped via Ethiopia and French Somaliland, and lingered in France till Israel became independent in May 1948 and it was safe to return.

In the same year he tried to organise his former underground association into a political party, without much success, and then dabbled in business with even less success. He served in Mossad, Israel's foreign intelligence service, for 10 years and was said to have displayed both considerable ingenuity and very considerable courage.

When he did become a backbencher in the Knesset, he did not shine, though he proved an effective Speaker and did much to raise both the decorum of the house and to limit the interjections of the more prolix members. And it was as Speaker that he formally escorted Egypt's President Sadat to the rostrum, on November 20 1977, during his historic visit to Israel.

Shamir was, however, far from happy with the eventual outcome of that visit. He felt that Begin went on to make far too many concessions in the Camp David agreement and when it was formally tabled in the Knesset, he abstained from the vote.

In October 1979 Moshe Dayan, who had left the Labour alignment to become Foreign Minister in Begin's administration, resigned in protest at the hard-line policies followed by the government in the occupied territories. At first Begin, in the absence of an obvious candidate for the office, acted as his own Foreign Minister, but in March 1980 he passed on the job to Shamir.

Shamir soon surprised his critics, and indeed his friends, by his adept handling of foreign policy. He improved relations with several African and Latin American states and opened a dialogue with the Soviet Union, which had broken diplomatic relations with Israel in 1967, and when Begin resigned in August 1983, he emerged as his natural successor.

But he had inherited a bed of nails. The army was bogged down in the Lebanese mire. Inflation was approaching 600 per cent and the economy was on the point of collapse. He immediately introduced grim austerity measures which, though not economically grim enough, did little to add to his popularity, and when elections came round the following year it was generally believed that while a Begin might have won them, a Shamir could only lose.

In the event he held Labour to a draw and after prolonged negotiations the two parties agreed to form a national government, with Shimon Peres as Prime Minister for the first half of its life, and Shamir for the second.

Peres extricated the army from Lebanon, brought solvency and stability to the economy, and improved the international standing of the country.

When Shamir took over in 1986 he built on his achievements, but where Peres had made some attempt to meet the aspirations of the Palestinians in the occupied territories, Shamir gave them nothing to hope for, and in December 1987 they erupted in open rebellion.

The first intifada dominated the 1988 election which in some ways became a referendum on the future of the occupied territories. Both parties agreed that there would have to be a political solution to the uprising, but while Peres accepted that Israel would have to make territorial concessions, Shamir would not hear of them. The result was another draw, but the religious parties had made important gains, and as neither Likud nor Labour had sufficient seats or allies to form a government without them, negotiations were prolonged.

Shamir managed to outmanoeuvre all comers, and eventually formed a national government with himself as Prime Minister and Peres as Finance Minister, through another rotation agreement. The coalition fell apart over his intransigent attitude in March 1990, when he came under intense pressure from Peres, America and the EEC, to enter into negotiations with the Palestinians. But after several months of haggling he managed to patch up a new administration without Labour support.

There was no respite, however, and as soon as he formed a new government, pressure was renewed and he was bracing himself for a showdown with America when a new figure came to dominate the Middle East scene in the person of Saddam Hussein. Iraq replaced Israel as America's most pressing concern in the region and the pressure on Shamir suddenly eased. It was as if the fates, which had carried him safely through so many hazards in his younger years, and had wafted him to high office in his later ones, had interceded yet again on his behalf.

But there was a high price to pay. As the first Gulf War got under way, Iraq targeted Israeli cities with dozens of Scud missiles, which, though often inaccurate and ineffective, killing only two people, posed a terrifying menace, particularly as Hussein had threatened to tip them with chemical warheads. The Scud attacks also challenged Israel's long held doctrine that no attack on it would go unpunished. Under intense pressure from America however, which was determined to keep its Arab allies on board in the campaign, Shamir reluctantly agreed not to order a military response. "I can think of nothing that went more against my grain as a Jew and a Zionist," he wrote later.

If that restraint boosted Israel's credit with America, Shamir's hawkish attitude to the Palestinians quickly strained ties again. He was at best a reluctant participant at the Madrid Conference of October 1991, co-sponsored by the US and USSR, taking a 14-man delegation deeply sceptical of any "land for peace" deal in the Occupied Territories.

By this time Israel's economy was again in trouble, particularly under the financial strain of absorbing a huge new wave of immigrants making their aliyah after the collapse of the Soviet Union. In the two decades since 1989, more than a million (of Israel's seven million-strong population) immigrants have arrived from former members of the USSR. In 1990 and 1991 alone Shamir's government had to deal with 350,000.

There were other arrivals, who, though fewer in number, were evacuated from Ethiopia in circumstances of greater drama. In May 1991, with Ethiopia's government close to collapse and the prospect of a regional war growing, Israel airlifted almost 15,000 Ethiopian Jews to Tel Aviv in only 36 hours, in a plan named Operation Solomon.

It was the kind of daring and ambitious foray on to foreign soil for which Israel was already famous. But Shamir's premiership was to be undone by that other characteristically Israeli trait - political squabbling and in-fighting.

Despite his - at best - grudging participation in the Madrid talks, he found on his return to Jerusalem that his right-wing coalition partners thought he had not been tough enough in negotiations with the Arab delegations.

Just as he had thought Begin too soft on Sadat, so he was now regarded by many on his own side as too easy on the PLO. His government collapsed, and, with voters frustrated with Likud after five years of intifada, and attracted to the possibility of a Labour government under the new leadership of former Chief of Staff Yitzhak Rabin, Shamir's miraculous political career began to wind down.

Binyamin Netanyahu took over from him as leader of Likud. From the opposition back benches Shamir continued his uncompromising stance about talks with the Palestinians, fiercely rejecting Rabin's talks with the PLO. When, seven months after Rabin's assassination in November 1995, Netanyahu led Likud to election victory, Shamir finally retired.

Yitzhak Shamir, whose wife Shulamit died last year, and who is survived by their son and daughter, was undoubtedly an astute politician. But his astuteness, born from early years in an underground armed movement, never amounted to statesmanship. As a man who declared, after leaving the Knesset for the last time, that "we made progress, and I hope we will again, but never by concessions, never by submission", he will be better remembered for his obstinacy than his vision.

Yitzhak Shamir, born October 15 1915, died June 30 2012