Nepal's business and trade hub of Birganj appears to have come out relatively unscathed from the recent spate of bandas and blockades. But in the villages outside this border town, it is a different story altogether.

The Maoist blockades affected India-Nepal trade, the mainstay of Birganj's economy and frequent bandas have dampened the business climate. But hardy Birganj locals have adapted to the incidents of violence and the murder of Mayor Gopal Giri two months ago.

"In every conflict, there is the first shock and then things become a habit," says business analyst Ramesh Bhattarai.

Like the capital Valley, Birganj has benefitted from the influx of villagers fleeing Maoist threats in the outlying districts. Banks and finance companies especially are doing roaring business. There are now 14 branches of banks and four finance companies in the city. Bhattarai predicts: "Birganj will be the last city to go under."

Trade prospects are still bright, and India recently set up a consulate here. Bangladesh is also starting an information desk office soon to promote cross-border business with Nepal. Once the World Bank-funded container dry port on the outskirts of the town is operational, trade is expected to get a big boost.

Birganj contributes 44 percent of national revenue, and 60 percent of Indo-Nepal trade passes through here. Many of Nepal's industries are located along the highway artery between Birganj and Hetauda. The number of large and small industries has reached 400, employing nearly 50,000 Nepalis.

But, as Manoj Upadhyay, editor of the local journal, Economic World, says: "All it takes is one road blockade to throw things off." Companies are cutting work shifts from three to one a day, and if Birganj is affected, the rest of the country is affected. Says Upadhyay: "We had a vision to turn Birganj into a special economic zone but all that is on hold now."

For the first time in eight years, Birganj residents have started to feel the heat. The Maoists made their presence felt with a series of bombings of government buildings. Business is slow and shops close down early after the government imposed a night curfew a fortnight ago.

"It's not the same place anymore. Seems like no one is safe," says Pradip Gupta, a local shopkeeper. Gupta recalls how the city was hardly affected at all during the past bandas called by the Maoists or other political parties. While the rest of the country came to a standstill during nationwide strikes, here life and business went on as usual.

Maoist extortion has hit an all-time high. The Maoists sent letters to all the industries, small business houses, hotels, department stores and shops for regular donations. "Not a single individual has been spared and everyone is paying," says a local Marwari businessman who did not want to be identified. "If we refuse to pay, the price will be heavy," says a local banker. Mayor Giri was reportedly killed for refusing to pay Rs 500,000 demanded by the rebels. "Since the incident, everyone has cooperated out of fear," says freelance journalist Chandra Kishore.

In the 22 VDCs outside the city, the Maoists operate freely, especially after the police stations were pulled back. Villagers are flocking into Birganj to live like refugees just a few hours away from their homes. Villagers in Parsa district attempted to throw out the Maoists two years ago. They formed a committee of 50 members including all-party politicians, community leaders and local villagers. "There was strong unity and their morale was high, but it didn't last long," says Kishore. The committee collapsed after five days when members were attacked by the Maoists. Rama Kanta Giri, the leader, was killed.

Ironically, in some villages the presence of the Maoists is the only deterrent against bandits from Bihar. Gangs from lawless northern Bihar regularly cross the border to raid Nepali villages. Since the police post was relocated to the city from Thori, 70km from Birganj, robberies have increased. Locals are helpless against the marauding gangs that come armed with pistols and rifles. "If the government gave them permission to keep arms at home, they would have protection," says Pratap Shrestha who fled from Thori after threats from Indian gangs.

Two years ago, when Pratap was elected chairman of the local buffer zone of Royal Chitwan National Park, he took action against timber poachers from Bhigna Thori village of Bihar. "It was just too much to bear for the villagers after they raped three of our young girls. It was time to teach these criminals a lesson," says Shrestha. He gathered 150 villagers and forest guards and raided the Indian village. The looters were surrounded and the two villages agreed that the looting would stop. Nine months later, it began anew and the Indian dacoits came looking for Shrestha.

Names like Mehfil, Lambu Chaudhary and Shambu Chaudhary make the villagers quake with fear. They lead the notorious Bihari Mehfil Gang which is engaged in smuggling and illegal hashish trade and timber poaching. When the Indian police restrict the gang's activities at election time, they target villages in Nepal for easy money.