bne -

A terrible political fudge in Slovakia on Tuesday, October 11 as the country's parliament late in the evening voted down the €440bn European Financial Stability Facility (EFSF), which is designed to help solve the euro sovereign debt crisis, though the various parties have basically agreed to pass it in a few days in return for the current coalition government's collapse.

The markets were on edge ahead of the vote, with the euro dropping from its highest level in almost three weeks against the dollar. The markets feared a 'no' vote would plunge the EFSF, which was agreed upon by Eurozone members in July to address debt crisis, into uncertainty, as it has to be ratified by all 17 euro members and Slovakia is the last member to do so.

However, investors will have to make do with a few days more of uncertainty as Emerging Europe's ropey internal politics yet again trumps regional common sense. In return for a 'yes' vote in a few days time, the current coalition government under Prime Minister Iveta Radicova has effectively fallen on its sword.

The problem for the government was that ahead of the vote the Freedom of Solidarity party (SaS), one of the members of Radicova's four-way coalition, made it clear its 22 lawmakers would abstain from the vote on the EFSF. And without the backing of opposition lawmakers from the left-of-centre Smer-Social Democracy party, which also ended up abstaining, it was looking as though the EFSF vote would fail.

Lacking SaS and opposition support, the government took a gamble and tied a confidence motion in itself to the vote in order to try to force a 'yes' vote through, but in the end the confidence vote failed as expected, by 21 votes. This leaves Slovakia scrabbling to build a new government, but the EU will probably ultimately get its bailout package approval - just in a few days time.

Following the vote, Smer said it was up to the four parties in the toppled coalition to approach it with offers, the BBC reported. "We're saying 'no' to a rightist government, but we're saying 'yes' to the rescue fund," Smer leader Robert Fico said during the debate.

PM Radicova later told the BBC she had asked her coalition partners to begin talks with Smer.