The three-way deadlock between the parties, the king and the rebels that has paralysed the country for years is now giving way to convergence between the Maoists and the parties.
Cold-shouldered by the king, the parties have turned to the Maoists and are making progress coaxing them to join the political mainstream. Sources say the rebels have come around to accepting multiparty democracy if assimilation of the rebel rank and file can be guaranteed.
The recently concluded Maoist plenum conditionally approved this strategy despite strong misgivings from the foot soldiers about any compromises with the constitutional forces. This is why the Maoists are pressing for an outside mediator to oversee disarmament and ensure the army will not sabotage the deal.
The CPI-M partners in the Indian coalition government led by Prakash Karat have been actively lobbying Nepali parties and the Maoists for months and this effort seems to be paying off.
US ambassador to Nepal, James Moriarty, got wind of this and issued a pointed warning on 4 November to the parties to stay away from the Maoists. He even underlined his message by briefing selected journalists that the Maoists can't be trusted and a party-rebel alliance would undermine the king's future role in ensuring stability.
There is now an open rift in the prevailing Indo-US policy on Nepal. A party-king pact favoured by Washington would isolate the Maoists and keep them fighting. A party-Maoist pact, would isolate the king and may keep the army on the battlefield. Either way, it could mean prolonged conflict unless strong pressure is brought to bear on the warring sides.
At the moment, it seems to be the rebels who are under pressure from Indian communists who have a vested interest in defusing Nepal's Maoist problem through a multiparty solution because of the implications for India's own radical Naxalites. The Iraq oil-for-food scandal that removed Indian Minister of External Affairs, Natwar Singh, this week has also weakened the palace's clout in New Delhi since he was seen to be sympathetic to the February First royal takeover.
The question now is which option will bring the conflict to an end sooner and determine who will get the credit (and the reward) for restoring peace.
In the short-term the king has the most to lose if the party-rebel alliance goes ahead because it would undermine his ambition to be an active monarch. However, in the long-term it will buffer the king from being directly tarnished by day-to-day politics and may actually help the monarchy to regain its shine.
Amidst all this, the king leaves Friday on a three-week tour that includes the SAARC Summit in Dhaka, the UN\'s IT jamboree in Tunis and an inspection of Nepali troops on UN peacekeeping duty in Africa. And everyone is left guessing about his next move.