The failure marked a split in the ruling coalition, where its "youngest" partner Fatherland and Freedom voted with the opposition against Krastins.
"Krastins is supported by the People's Party and he will not be able to resist the party's economic policy which will result in destruction of its economic opponents," said MP Dzintars Rasnacs from Fatherland and Freedom, the most conservative member of the ruling coalition.
In order to save the day, the two other members of the coalition, Latvia's Way and the People's Party, who allegedly split the two new jobs - one for Krastins and another, the yet-to-be-created regulator of public services - among themselves, will offer an equal position as a reward to the Fatherland and Freedom party, the Latvian daily Diena reported on Sept. 19.
However, the plans' critics say that after the Sept. 14 vote such a solution is unacceptable. "Politically marked persons should not be in the management of supervisory institutions," said Maris Grinblats, the Fatherland and Freedom party chairman.
The Finance and Capital Market Commission will consume the present supervisory institutions of banking and insurance, which exist under the Latvian Central Bank and Ministry of Finance, as well as the Securities Market Commission.
The aim of the new institution, due to begin its work in July, 2001, is to regulate selected financial institutions.
"A unified model of finance and capital market supervision is a modern pattern, which has been implemented in more than 10 countries including economies in transition," Krastins has told Latvian Radio.
The People's Party was infuriated that its coalition partners, Fatherland and Freedom, had let it down for the second time in a week. On Sept. 7, contrary to the PM's demand, the Fatherland and Freedom party voted against extradition of Social-Democrat MP Janis Adamsons, accused of slander over pedophilia scandal. Also, last month the party joined the Social Democrats in squashing the govern-ment's plan to privatize the energy utility Latvenergo.
Party Chairman Andris Skele said that all parties who voted against the motion Sept.14 - Fatherland and Freedom, the Social Democrats and other left-leaning parties - were "children of the same political family which has a foster father down in Ventspils swampland."
He claimed that the outcome of the vote had been determined by the influence wielded by Ventspils Mayor Aivars Lembergs, Skele's longtime rival.
Lembergs, the mayor of the western Latvian port city of Ventspils, sharply criticized Krastins before the vote in Parliament. The feud between the two men reportedly dates back to the time when Krastins as the finance minister refused to give to the Ventspils port state guarantees for a loan.
After the failed vote the People's Party representatives indicated that it clearly demonstrates the lack of support of the PM by the parliamentary majority. Other ruling coalition parties did not see the vote as an indication of the government crisis. Latvia's Way chairman Andrejs Pantelejevs told reporters that this lesson will toughen the ruling coalition and the government will think about further actions, the main objective of which still will be to preserve this government.