On June 3, 2004, the king of Nepal appointed Sher Bahadur Deuba as the 14th prime minister in 14 years. If a frequent change of Prime Ministers could solve a country's problems, Nepal should have achieved a lot by now. It is, however, in the throes of a civil war since 1996. The hill kingdom's all powerful-monarchy had yielded to popular demands for democracy in 1990. After the introduction of multi-party democratic system of governance, Nepal witnessed unprecedented economic growth for about five years (1990-1995) under the policy of liberalisation followed by the Nepali Congress government of Prime Minister G.P. Koirala. However, the economic bubble began to collapse by 1995.

Nepal's economic collapse began after the removal of G. P. Koirala from prime ministership in 1994 due to political infighting inside the Nepali Congress. This was followed by frequent changes in the government and prime ministerial office over the next seven years (1995-2001). The pro-market policies of the Koirala government were partially abandoned under pressure from a growing urban working class, a relatively new force in Nepal's politics. After the 1993-94 high levels of growth of 7.6 per cent due to favourable monsoon, Nepal's agriculture was also facing a rather bad time. Caught between the donors and the newly empowered urban middle class who demanded higher levels of privatisation on one side, and the impoverished rural poor and the new working class, who asked for higher state expenditure in the social sector on the other, the inexperienced leadership of Nepal's new born multi-party democracy adopted the policy of managing the country through short term and ad hoc measures. In reality it meant appeasing the most vocal pressure group of the day.

After the fall of the government led by the Communist Party of Nepal-United Marxist Leninist (CPN-UML) in 1995, which succeeded the Koirala government, the political situation became more unstable. The far left of Nepali politics under the leadership of the Communist Party of Nepal-Maoist (CPN-M) had walked out of electoral politics in 1994 saying that the existing constitution was incapable of addressing the problems of Nepal's poor. It wanted complete abandonment of pro-market policies, nationalisation of the property of the 'comprador and bureaucratic capitalists' and total land reforms. In 1996, the Maoists submitted a 40-point Charter of Demand, which, among other things, demanded abolition of the monarchy, establishment of a socialist republic and scrapping of the 1950 'unequal' Treaty of Friendship with India. Without waiting for a formal response from the government of the day, the Maoists launched an armed struggle to overthrow the state. The 'people's war' phase of Nepal's history had begun.

Between 1996 and 2001, Nepal changed 8 prime ministers. In real terms, almost all the governments responded to the Maoists through police repression. The clashes between the Maoists cadre and the supporters of the Nepali Congress began as early as in 1991 in the mid-western districts of Rolpa, Rukum and Jajarkot. During these clashes, the G.P. Koirala government allowed the police to favour the Nepali Congress supporters leading to politicisation and corruption in the police force. However two police campaigns, Operation Romeo (1994-95) and Operation Kilo-Sera 2 (1997-97) have become known for their brutality. While Operation Romeo was limited to four districts, Operation Kilo-Sera 2 was spread over 18 districts. As a result of the reign of terror let loose by the specially trained commando force, about 20,000 rural youth had to flee their homes. Many analysts have said that these two police operations launched with the objective of 'winning hearts and minds of the rural people' achieved the opposite. More rural youth were motivated to join the insurgency.

Throughout this time, the political parties tried to bring the Maoists back to the so-called political mainstream through dialogue and ultimately sharing political power with them. Living inside the hothouse of Kathmandu's donor driven culture of liberalism and consumerism no one believed that the Maoists would not be pragmatic enough to see the advantages of sharing the rewards of state power. Every one was convinced that there was no idealism behind the 'people's war'. It was just another 'ploy' to capture political power.

Failure of Talks
In April 2001, the Maoists launched a devastating attack in the town of Holerie, killing 70 police men and overrunning the entire town. G. P. Koirala, then prime minister went to King Birendra Bir Bikram Shah and requested for the deployment of the Royal Nepal Army to fight the Maoists. The king apparently agreed, but the deployment did not take place as the army refused to work under the civilian government resulting in Koirala's resignation. On June 1, 2001, King Birendra and his entire family were killed, apparently by his son, Crown Prince Dipendra who later killed himself. Late King Birendra's only surviving brother Prince Gyanendra ascended the throne of Nepal.

After a series of military successes in the countryside, the Maoists yielded to political and popular pressure and agreed to a dialogue with the government in August 2001.By then they had extended their operations to about 49 of the 75 districts of Nepal. The Maoists began with the demand for the abolition of monarchy and creation of a republic. Later they scaled down their demand and asked for the dissolution of the parliament and the government, formation of a national government with their participation, election of a new constituent assembly with full mandate to decide the future political structure of Nepal be it a republic, or a constitutional monarchy, a federal state or a unitary polity.

On November 23, 2001 -- after four months of cease-fire and peace talks -- the Maoists walked out of the dialogue blaming the government for not responding to any of their conditions favourably. The Maoists launched armed attacks on army barracks, police stations and other government establishments in Dang, Syangja, Surkhet and many other districts of Nepal. Several army men and government employees were killed. Vehicles including a helicopter and government buildings and communications towers were destroyed. The attacks continued and spread over to about 25 districts of Nepal. On November 25, the Maoists declared the formation of a 'People's Liberation Army' to carry forward the people's war.

State of Emergency
Accusing the Maoists of betrayal, Deuba -- then the 11th prime minister of Nepal -- named the Communist Party of Nepal-(Maoists) a 'terrorist organisation' and declared a 'state of emergency' on November 26, 2001 through an ordinance. On the same day the government also promulgated the 'Terrorists and Violating Work (Control & Punishment)-2001 Ordinance. These were brought to enable the mobilisation of the Royal Nepal Army, which, till then, was not involved in counter insurgency operations in Nepal. These ordinances were subsequently approved by Nepal's parliament and enacted as law.

However, in May 2002, when Deuba wanted the state of emergency to be extended for the third consecutive time by the parliament, the Nepali Congress (NC) to which he belonged and the Communist Party of Nepal- United Marxist and Leninist (CPN-UML) -- the main opposition party, opposed the move. In March 2002, the parties had agreed to extend the state of emergency for the second term on the condition that the constitution would be suitably amended so that the provision of the three-month period of 'state of emergency' could not be abused by any government. The parties had also made the 'Terrorists and Violating Work (Control & Punishment)-2001 Ordinance’ a law since it was claimed that with this act the government would not require to extend the state of emergency indefinitely. The law allowed for preventive detention for periods up to two years without trial. The Deuba government had failed to bring forward the promised amendment and the parties were in no mood to extend the state of emergency in May 2002, particularly as there were reports of serious violation of human rights of ordinary people by the Royal Nepal Army in the rural areas. Deuba nevertheless argued that continuation of the state of emergency was necessary for the deployment of the Royal Nepal Army.

Parliament Dissolved
The Nepali Congress (NC), particularly its powerful President G. P. Koirala, and the CPN-UML, wanted the army to be brought under civilian control. Deuba apparently did not agree with his political colleagues and was willing to give in to the demands of the Royal Nepal Army. He defied the directives of his party. He and his followers broke away from the NC and formed Nepali Congress Democratic (NC-D). Realising that he would be voted out of office in the parliament, Deuba advised the king to dissolve the parliament. The king obliged, the parliament was dissolved and the state of emergency was extended for a period of another three months through an ordinance.
The nine-month long state of emergency ended in August 2002. This period witnessed an enormous increase in the levels of violence in Nepal. According to INSEC Human Rights Year book of 2003, a total of 3525 people were killed during these nine months. During the five and a half year period (February 1996-July 2001), a total of 1691 persons had lost their lives to Maoist and state violence. In the nine-months of emergency, on an average about 391persons were killed every month. Of these about 60 per cent were killed by the army and the police.

Militarily, there was a stalemate. The deployment of the Royal Nepal Army since December 2001, following dramatic attacks by the Maoists on army and police camps after the breakdown of the first peace talks, did not make an appreciable shift in the Maoists tactical advantage. Indian military experts visiting Nepal in early 2002 had observed that the military tactics of the Maoists were impressive, especially as the military commander, 'Comrade Badal', had no professional military training. However, Maoist reverses in June 2002 in Khara, (Rukum district) where the army battalion reportedly had prior warning of an attack, suggested that army intelligence was advancing. Emboldened by international support and lures of a war economy, the palace, the army and the caretaker government of Deuba were bent on pursuing the military option.

The palace massacre had created a sense of uncertainty. The new king, Gyanendra was known to be a royalist hardliner. G. P Koirala, former prime minister of Nepal had warned of a palace-army conspiracy behind the dissolution of the parliament. The Maoists warned of a threat of extreme anarchy with the ganging up 'of domestic feudal forces and international reactionary forces'. The Maoist party in July 2003 renewed its offer to participate in elections provided there were provisions for an interim government or mutually agreed election procedures. Several politicians and media persons in Kathmandu interpreted this as a scaling down of their earlier demand for a constituent assembly and willingness to negotiate power relationship with the palace, the army and the government. The Maoist's offer of talks was rejected. They were told first disarm and then talk. The U.S. and British support for a strong military response and New Delhi getting tough with Maoist supporters in India in the wake of the king's visit, seemingly made the palace more inflexible.

The political situation was spinning out of control. Deuba, as the caretaker prime minister, had dissolved the CPN-UML controlled elected institutions of local self-governments at the district and village levels. With the exception of his caretaker government, all other constitutional authorities were dead. The constitution required that elections must be held within six months of the dissolution of the house. Though the emergency was lifted, there was too much violence in the country. Under the circumstances the political parties were not ready to participate in election. They legitimately feared that the Maoists and the army would influence the polls. They told Deuba that a peace agreement with the Maoist insurgents was a necessary pre-condition for holding of elections. In October 2002, Deuba told the king that he could not hold elections to the parliament; the king fired him for his incompetence and inefficiency.

King Takes Over
On October 4, 2002, King Gyanendra Bir Bikram Shah assumed direct rule under Article 127 of the constitution. Since then Nepal's parliamentary form of government and the multiparty political system is in a state of suspended animation. Article 127 of the constitution of Nepal authorised Nepal's king to 'remove difficulties' in the functioning of the constitution of Nepal. The king appointed Lokendra Bahadur Chand, a politician of the Panchayet era as the prime minister. Chand, under the king's 'advice', formed a cabinet with technocrats, businesspersons and NGO activists. With the Kathmandu elite moving away from the political parties and the media blaming the political leaders for the economic and political mess, Nepal's multi-party system began to implode from within. The Nepali Congress party, which led the movement for democracy in Nepal in the 1980s, was virtually split. The main opposition party the CPN -UML whose cadres were under pressure of the Maoists in rural Nepal, for tactical reasons opted for status quo.

A Himalmedia-Nielson ORG survey done before the take-over had polled the Maoists as the main threat to democracy (75 per cent). However, more than 37 per cent indicted the Deuba government as posing a threat to democracy, while 34 per cent of the respondents blamed the Nepali Congress. About 24 per cent blamed foreign powers while only 17.6 per cent had named the palace the guilty party. The nomination of 11 Prime Ministers in 12 years and incompetent governments across the right-left spectrum had alienated the people from self-seeking political parties and corrupt politicians.

Political Crisis Dooms Growth
Nepal's new-born commercial and industrial class, which had benefited from the unprecedented growth of the economy in the first five years (1990-95) of multi-party democracy, blamed the political parties for the down turn of the economy. Nepali Congress had come to power in 1990 with a promise of economic reforms and liberalisation. The G. P. Koirala government had gone about seriously implementing its programme of dismantling old regulatory mechanisms and introducing structural reforms and liberalisation policies that relied completely on market forces. He had encouraged the private entrepreneurs to invest in areas hitherto reserved for the government or controlled by the palace and its confidants. The Industrial Policy of 1992, Foreign Investment and Technology Transfer Policy of 1992, the Industrial Enterprise Act of 1992, reduction of control on foreign exchange, virtual abolition of import licensing requirement, deregulation of the banking sector and several other such measures had brought about a surge in investment from domestic and foreign sources. During 1990-95 Nepal's industrial sector achieved a growth rate of almost 10 per cent. By 1993-94 Nepal's carpet and the garment industry was exporting goods worth US $ 205 million amounting to about 80 per cent of Nepal's total annual export. Fuelled by an unprecedented agricultural growth rate of 7.6 per cent, in 1993-94 Nepal's GDP registered a growth of 7.9 per cent. This was the dream year.

The dream was soon shattered. It all started with the beginning of infighting in the NC and removal of G.P. Koirala as the prime minister in 1994. The initial momentum generated by the reforms began to wane. The structural imbalances caused by the narrow base of the economy increased the economic inequality. The clamour for higher government expenditure in the social sector forced revenue starved government to invite the private sector to invest in education, health services, communications, roads and transport. The opening up of the core sector to uncontrolled privatisation led to bad governance and rampant corruption among politicians. After the fall of the Manmohan Adhikari led CPN-UML government in 1995, there came a series of coalition governments which were primarily concerned to hold on to power by any means.

The successive coalition governments introduced a few regulatory measures and raised more revenue. However the pro-private enterprise liberalisation policies, which had virtually abolished all state regulatory mechanisms on market and trade, could not be abandoned due to donor pressure. The governments introduced a series of regulatory measures for the protection of the urban workers and the public investors in the corporate sector. Some of these were too idealistic, like the reforms in the labour laws that introduced payment of bonus, health insurance, gratuity and creation of employees housing fund without taking into account the capacity of the industry. As a result many enterprises were forced to close. Other reforms like the Company Act required a wide dispersal of shareholding and large and unwieldy quorums of shareholders. The Company Act virtually defeated the objective of corporate democracy. Little was done to improve the conditions of Nepal's vast army of rural poor. The agenda of land reforms remained a distant dream. The unemployed people of the hills, who benefited little from the early period of the economic boom, continued to migrate to India and other places in search of menial work.

Nepal's economic problems, abysmal poverty and inequality, could not be solved either by a blanket negation of the market forces or by a totally unregulated market economy. It required a policy of regulated capitalism, increasing the revenue of the state and enhancing state investment in the social sector. But the leaders of the multi-party democracy were too busy in manipulating their supporters within the parties to secure ministerial jobs in the frequently changing coalition governments. They began to look more like politicians of the earlier Panchayat regime who camouflaged their semi-feudal leanings with pseudo-socialist rhetoric.

Elites and the NGOs
In the vacuum created by a takeover, King Gyandendra, who had ascended the throne amid suspicion, became popular. Among the Kathmandu elite there was a sense of relief. Obviously the new Nepali elite, which was spawned by the pro-market liberal reforms of the first NC government in 1990, was glad to accept the king as the symbolic guarantor of Nepal's security, integrity and political stability.

Nepal's traditional elite consists mainly of Ranas, Shahs and Thakuris who joined this charmed circle through marriages with Ranas. It also included a small section of select group of Janjati (Indigenous peoples) like the Magar, Gurung and Newari who were employed in the Royal Army and in other organs of the state. Other upper caste Hindus, Bahuns (Brahmins) and Chetris (Trading community) were recipients of favours from the palace, though not a part of the high elite of the kingdom. The royal family and their confidants owned virtually all the industries, trading houses, import agencies, tourism and hotel business.

The twelve-year period of multi-party democracy empowered the non-elite Bahuns and Chetri castes enormously. According to the statistics released by Nepal's home ministry, during 1990-2000 the Bahuns and Chetris, who constitute about 29 per cent of Nepal's population, came to occupy almost 90 per cent of all key positions in government jobs. In the post-1990 re-organisation of state services, the Newari indigenous peoples of Kathmandu valley lost hundreds of government jobs, which were given to them by the Shah Kings as a reward for their support to Prithvi Narayan Shah against their Malla kings. Other Janajatis and the Bhojpuri and Maithili speaking Madeshi people of the Tarai in the south who constitute about 61 per cent of Nepal's population also suffered similar losses.

Nepal's elite is basically located in Kathmandu and a few select urban areas. The violence of the Maoists and the counter violence of the state have not directly affected this stratum of the society as much as the rural poor. Since the resumption of the hostilities by the Maoists in November 2001, the elite driven civil society had began to view this conflict essentially as an opportunistic power struggle between the Maoists and the state. This reductionist approach limited the search for peace to techniques of quick fixes and their inability to address the perceived injustice or what Galtung called 'structural violence'.

The Civil Society
A significant section of Nepal's civil society today consists of the Non-governmental Organisations (NGOs) which started in the 1980s. These should be distinguished from the traditional community institutions of Nepal such as the guthi, parma, dhikur and Paropakar Sansthas. These traditional community institutions functioned locally, mobilising local resources and working for community improvement and charity. The spirit of voluntarism and philanthropy had nurtured these community institutions. The individuals engaged in these institutions were seen as persons who had sacrificed their lives in the service of the poor and the needy and were respected by all. They had the capacity to transcend the limitations of their class or caste. A sense of community, self-help and the values of Dharma motivated these efforts. The proliferation of NGOs in the last two decades has largely eclipsed these sustainable roots of social engagements, particularly at the local level.

Over 11,000 NGOs were registered in Nepal by the end of 2000. This is a phenomenal growth compared to only a few hundred in 1990. It is estimated that about 40,000 persons are employed in Nepal's development and NGO sector. With the advent of multiparty system in 1990, in response to the strident call for the roll back of the state by the World Bank, IMF and the western donor countries, NGOs were deregulated. In the absence of an effective monitoring agency it is difficult to estimate how much funding goes into the NGO sector. A rough estimate, however, is that the NGO funding compares favourably with Nepal government's development budget, which is about one billion U.S. dollars annually. About 50 per cent of this comes from foreign assistance. Unfortunately this massive investment and the phenomenal growth of the development NGOs have not produced any significant change in the lives of the majority of Nepal's poor. Nearly a decade after the creation of the development NGOs by the donor agencies, which saw them as the new vehicle for poverty alleviation, nearly 71 per cent of Nepal's 21 million population continues to live below the poverty line.

The ubiquitous presence of upper caste Bahun-Chetri combine at the leadership level of government, business, NGOs and political parties, including the Maoists, is a major source of social tension in Nepal. However, the Maoists have, on occasions, accused the NGOs of working as agents of Nepali capitalists and their imperial masters.

The People and 'The People's War'
The Maoists continued to target VDC offices and health facilities, water supply and electricity systems, communications units and other infrastructure facilities in districts largely outside the Kathmandu valley. The government imposed severe restrictions on supply of medicine, food and other essentials to these regions in an effort to prevent the Maoists from accessing these supplies. Reports published by HURON, INSEC and Advocacy Forum, Nepali human rights organisations indicated that food had become an instrument of war in the worst affected conflict areas. These were also areas that habitually suffered from food insecurity.

As a part of their counter insurgency measures, the security forces imposed restrictions on movement of people from and into the conflict zones. The disruption of local market centres and supplies, the 'collateral' destruction of educational and health facilities, water supply systems and communications facilities imposed an enormous burden on the rural inhabitants who were obliged to go to distant market towns for every small need. In the market towns they were harassed and intimidated by the security forces that were unable to distinguish between Maoists and neutral people.

In this war, 'non combatants' were at the mercy of the Maoists who abducted and killed ‘class enemies' and informers; and the security forces in search of 'Maoists' arrested people indiscriminately. Torture, illegal arrests and custodial killings by security forces increased enormously, according to reports by national and international human rights groups and sections of the media. The nine months of emergency also witnessed a large increase in the population of the internally displaced people from the 'disturbed' rural areas to the district headquarters and elsewhere.

As the war raged in the countryside, the political parties in Kathmandu continued to debate ways and means for reviving the dissolved house of parliament. For them the revival of the parliament became synonymous to the sovereignty of the people. In February 2003 the Nepali Congress and CPN-UML launched a nation-wide agitation for restoration of the dissolved parliament. The leaders of the two parties started visiting district centres to mobilise the people. They also visited India to parley with Indian political leaders to secure their support for the restoration of democracy. They received little support from the Hindu radical nationalist party-led government of India. Both Mr. Koirala, President of the NC, and Mr. Madhav Nepal, General Secretary of CPN-UML initiated contacts with the Maoists. The big donor countries also advised the political parties to cooperate with the palace in its efforts to subdue the Maoists.

Accent on Military Response
Having marginalised the political parties the king had embarked on the path of empowering the army. The governments of the U.S. and India extended full support to the king's policy of militarily crushing the Maoists. While most of the EU states advised caution and recommended political measures, Britain extended covert support to the Nepalese army providing 'transport' helicopters and night vision equipment apparently to be used only in rescue operations. The strength of the army was enhanced by induction of 10,000 more soldiers. A 15,000 strong armed police force was created. Administrative changes were brought about to coordinate development and security operations.

The army received 5000 Belgium made Minimi guns. In 2001 the U.S. had promised military assistance of nearly 30 million dollars. About 5000 US made 30-round M-16 rifles were in the pipeline. U.S. military advisers arrived in Nepal to train Nepalese army in counter insurgency. Indians supplied Insas rifles; helicopters mounted with guns and land-mine proof transport vehicles. Nepalese Maoists were already declared terrorists in India. In the cities and towns across the border, Indian police began arresting Nepalese citizens on suspicion of being Maoists and handed them over to the Nepalese authorities without following the legal requirements of extradition. The people in general and the elite in particular who supported the military actions remained confused about the extent of curtailment of their rights.

Second Round of Peace Talks
The second round of peace talks between the Maoists and the king's government was announced in early January 2003. A cease-fire was declared on January 29, 2003. However, the first round of negotiations did not begin before April as the government took time to name its team and define their mandate. Unlike the first round of peace talks in 2001, when the government side was represented by cabinet ministers responsible to the parliament, in the second round of the talks the government side was represented by nominees of a prime minister who was himself a nominee of the king. From the beginning of the talks, it was clear that it was not the prime minister and his team but the palace and the army who held the real power. The lack of clarity on their mandate and lack of communications hampered the government negotiators. This became clear during the protracted negotiations on the 'code of conduct' to be observed by the two sides during the cease-fire.

This time the Maoists came to the peace table calling themselves the 'Naya Satta' (new regime) demanding parity of status with the government side. They stipulated that during the ceasefire the belligerent forces of the two sides -- the Royal Nepal Army and the People's Liberation Army, should limit their movements within a radius of five kilometres of their respective camps. They demanded that their un-armed cadre, like the civilian employees of the government, which they called the Purano Satta (old regime), should be allowed to move freely all over Nepal. While the government team accepted these conditions, the Royal Nepal Army refused to abide by the agreed code of conduct. They specifically rejected the five-kilometre limit on their movement.

On the political side, the Maoists repeated most of their earlier demands. Basically these were:

1. Bring the political parties to the peace talks and initiate steps for the formation of an interim national government by dissolving the present government.
2. The national government should hold elections for a constituent assembly, which must dissolve the ambiguity about where the sovereignty lies with the people or the palace. During the second round of peace talks the Maoists diluted their earlier emphasis on abolition of monarchy as a precondition for joining the national government. They however insisted that the constituent assembly should have the right to decide on this issue.
3. The Maoists also demanded reorganisation of the Royal Nepal Army as a national army under the control of the elected government of Nepal.

Civil War Begins
The talks continued till August. The cease-fire lasted for about seven months. The second cease-fire was not as peaceful as the first one. According to a study by INSEC, during the first cease-fire in 2001 there were only seven instances of killing while the second cease-fire saw 127 persons killed. On the eve of the fourth round of talks, on August 17, 2003 the Royal Nepal Army conducted a raid in Doramba village of Rsamechap district where Maoist cadres were reportedly holding cultural programmes to spread the message of their politics. According to the National Human Rights Commission of Nepal, 19 unarmed Maoist cadres who were engaged in a 'cultural' programme in Doramba were arrested by the army, taken outside the village and shot at point blank range in an execution style killing. The Maoists walked out of the peace talks and hostilities were resumed.

The Royal Nepal Army initially rejected the report of the National Human Rights Commission. However, under the combined pressure of international and national human rights organisation and the advice of donor governments, the army finally decided to conduct an inquiry into the Doramba killings. Subsequently, the officer in charge of the Doramba operation was 'suspended'. He is reportedly being tried in a military court. However, army officers, in their private conversations, openly admire the leader of the Doramba operation. They respect him for courageously implementing the official policy -- take no prisoners, eliminate all Maoists. They blame human rights organisations and politicians for persecuting him. They are angry about being prosecuted for killing 'enemies of the state'. They argue that the soldiers are correct in killing Maoists prisoners as the Maoists have killed family members of the soldiers in the villages.

Whither Nepal ?
Since 2002, the king has changed prime ministers thrice. The most recent nominee is Sher Bahadur Deuba whom he had thrown out of office on October 4, 2002 for incompetence. This he did af