To address the underlying causes of the insurgency, the government needs to deliver development to remote villages. But many of them are under control of the Maoists, whom the government has once more declared terrorists.

Now, the government is under pressure from some of Nepal's donors, who support 75 percent of the development budget, to involve Maoists in grassroots projects. Government ministers have said privately that they find the idea absurd.

At meetings with donors on Wednesday and Thursday, the government had a tough time convincing them the situation was under control and it was capable of taking development to the people. Most foreign-funded aid projects have been disrupted, and Nepal's 30 year achievements in child health, literacy, water supply and forestry are seriously threatened.

Local bodies have been without elected leaders for more than a year, and most VDC secretaries have fled to the safety of district headquarters after the ceasefire collapsed 27 August. Much bilateral aid has been frozen pending the reinstatement of VDCs and DDCs.

The government has proposed forming all-party village committees, and donors suggest Maoists could be included in them. "Let an all-party or cross-party committee be the solution," says Danish Charge d'Affaires Gert Minecke. "In their stronghold areas, the rebels could be included, and elsewhere it might not be necessary."

Rudiger Wenk of the European Commission delegation agrees: "If the idea stops violence, why not bring in the Maoists as well?" Ironically, the Maoists have said they don't think much of the idea, stressing their priority is the revolution. Yet, some donors believe if Maoist-supporters in villages are brought on board-even by camouflaging them as community user groups-it could pave the way to resume local development work.

Multilateral donor agencies echo the same message. "Everyone should be involved to make the develoment projects move ahead," says the new ADB's Country Director Sultan Hafeez Rahman, citing the example of Sri Lanka where the Tamil Tigers were involved in project implementation. "The idea is to broaden participation so the people benefit," Sultan said. Wednesday's consultation meeting focussed on the World Bank's $70 million Poverty Reduction Strategy Credit, and the IMF's $70 million Poverty Reduction Growth Facility for three years.

There has been an escalation of violence while the missions from Washington are in town, and government officials are jittery. But Shankar Sharma of the National Planning Commission feels team members are satisfied. "If they are positive, the other donors will be too," Sharma said. The government has tried to convince donors its project budget will not be diverted to security. But budgetary support is different, and some donors are worried their poverty-reduction support could become "fungible".