Everything the Maoists wanted has come to pass. And now, finally, they are face-to-face with the monarchy.

For both sides, this is now a fight to the finish. Seven years after starting their "people's war" the Maoists have got themselves exactly to the point they wanted-thanks in large measure to a series of blundering elected governments.

In a statement last week before the royal proclamation, Maoist supremo Prachanda announced that his forces had now reached "strategic balance"-that is Maoist jargon for a phase in which the military strength of the guerrillas and the government are evenly matched. After ataining strategic balance, Mao Zedong started setting up permanent bases with barracks, and behaved like a conventional army.

For his part, King Gyanendra may have decided that a weak and faction-ridden government was only benefiting the insurgents. Time was of the essence, and the sooner he got rid of discredited politicians and put a working government in place the easier it would be for him to defuse the widening insurgency. However, by temporarily taking on executive powers, he has now pitted himself directly against the Maoists.

Whether or not the "People's Liberation Army" and the Royal Nepal Army are actually of equal strength is debatable. But what is clear is that the Maoists have been able to deliver devastating blows to military bases. These have psychological value besides yielding large caches of automatic and other heavy weapons. More importantly, by overrunning heavily-guarded garrisons, they have been able to demolish the army's aura of invincibility.

Having convinced themselves that they have achieved strategic balance, the Maoist military leadership is now trying to decide whether it should continue with hit-and-run offensives, or launch a mass uprising to take a dramatic leap forward. Prachanda said in the underground newspaper Janawaj last month that he feels his forces can defeat the army "within one year". Other Maoist statements on the Internet have portrayed the royal proclamation as proof that the "reactionary, fascist monarchy bloc" is now in its final throes and "victory is at hand".

This sounds like bravado and an effort to keep cadre morale high. A military victory for the Maoists is not likely to happen that soon. The first factor is that the Indians and the Chinese just wouldn't allow it. Second, the Royal Nepal Army's morale has just got a major boost since the soldiers have always been told that they fight for "king and country". The army's job will also be made easier if the Maoists start fighting out of strongholds, since it will be easier to distinguish the guerrillas from ordinary villagers. The tables will be turned, and the army may in places now have to be a guerrilla force against fixed Maoist positions-something like the sweeps that the army is conducting in Rolpa and Rukum this month.

Interestingly, Maoist movements elsewhere (Sri Lanka, Peru) have started going downhill after reaching strategic balance. The ruling elite and its armed forces seem to be suddenly shaken awake when the insurgents arrive at the gates. The other serious mistake the Maoists are making is that they have alienated themselves from the people, especially in the past nine months, with their brutal killings, attacks on schools, infrastructure, and development. This is an indication that the movement is being dominated by extremist thinking, the rationalisation that the ends justify the means. This goes against Mao Zedong's teachings, in which he said that the decisive factor in any war is public support, not weapons and soldiers.

It is in this light that the Maoist offer for talks must be seen. They need to show parliamentary parties that they are reasonable and to prove to the people that they are not war-mongers. Talking about talks has propaganda value.

King Gyanendra's dramatic decision to take control is bad news militarily for the Maoists. But politically, it helps them by driving a wedge between parliamentary forces and the king, and pits them directly against the monarchy. Militarily, the Royal Nepal Army can now be expected to get more serious about launching offensives, upgrading intelligence, increasing the number of men under arms, and ensuring better equipment and logistics.

Kautilya said that whoever has the army has political power. Mao Zedong said that the people do not exist without the army. King Gyanendra's move to have a direct say in running this country will only be able to resolve the Maoist insurgency if he puts together an effective government that can win the people's hearts and minds. The king has an advantage because most Nepalis are fed up with both the politicians and the Maoists.

For this, he needs a cabinet of honest and efficient managers. He can't have faces from the pre-1990 days, and he can't have reactionaries. He also can't have the first generation of political leaders who have totally discredited themselves. This narrows down the choices, but that is the only way he can launch a social reform movement to sustain the new hope that he has given the people.