The constitutional forces are still in disarray, the Maoists are not in the mood for concessions and, like his predecessor, Prime Minister Surya Bahadur Thapa has failed to persuade opposition leaders to join an all-party government. He says he wants to militarily soften the Maoists, and has vowed to hold elections.

Some are skeptical and fear their freedoms are endangered, but others see him as a skilled administrator and a source of stability. The question for this divided nation is: where do we go from here? Most people seem to agree that we should be headed towards multi-party democracy and not a return to partyless authoritarianism or a totalitarian communist republic. But they can't agree on how to get there. In the year after the king took over, the Nepali people showed remarkable tolerance towards two Panchayat-era prime ministers.

The fact that the country's transition towards democracy coincided with the rise of the insurgency raises some fundamental questions. The Maoists saw Nepal's feudal social structure as the singular source of chronic poverty and injustices, and an armed revolution as the only way out. To others, greedy politicians and their short-sighted vision (not the multi-party system) was the source of the problem. The Maoists exploited the people's apathy toward democracy. Pre-ceasefire data show that what started out as a small rebellion in the mid-western districts in 1996-1997 had by 2002 engulfed the entire country, with much of the rapid expansion taking place in the hills (see figure).

By being ready to sacrifice thousands of Nepali lives and dismantling national infrastructure, destruction dominated the revolutionary strategy. An extreme ideology and forcing the population to pay any price to further the cause began to overshadow the Maoists' initial genuine social concerns for the suppressed masses. An escalation of violence due to state counter-violence was inevitable, and ordinary Nepalis were caught in the crossfire-seen in the dramatic increase in the state's kill-ratio.

Of the more than 8,000 Nepalis killed so far by both sides, almost half have been non-combatants: farmers, teachers, students, businessmen, journalists. Human rights has become such a concern that foreign assistance is jeopardised. With two failed negotiations and two royalist prime ministers, and parliamentary parties sidelined, the prospects look bleak.

Since it was King Gyanendra who took the dramatic move in October last year to sack the prime minister, it is now up to him to find a way to extricate the country from this rut. It is also now clear that the leadership of the constitutional forces must be at the helm of such efforts. To that end, the revival of parliament may turn out to be a lot less costly proposition than conducting an election. High-profile killings of military and security officers are a reminder that any move towards election without first forging an understanding with the Maoists may turn out to be a huge mistake. Does it really matter at this stage, therefore, what mechanism we use to chose our leaders? Do we really care, given the crisis of state? The rationale for the least-expensive and least dangerous option is overwhelming. Especially since either way, the king will have adopted a device to transfer power where it belongs: to the peoples' representatives.

Any attempt to subvert democracy permanently in the name of security will actually have far-reaching consequences. Democracy, no matter how messy, is essential in inhibiting conflict.

An analysis of the empirical data from Nepal's 75 districts over the last seven years and a behavioural link with socio-economic factors reveal interesting results. Communities with a higher level of trust and civic participation, as measured by an index of social capital, have been found to be less vulnerable to Maoist violence and the killings have been less pervasive. Similar results are found for the democracy index that was measured by the voters' participation rate and the level of successes of the smaller parties in garnering votes. The implication is that the current winner-takes-all system, where one or two parties dominate the political spectrum, is not particularly conducive to peace. Single-party dominated communities are likely to produce resentment and less communal harmony, making them vulnerable to social strife and conflict.

Similarly, communities which received a higher level of government grants on a per capita basis are less vulnerable to violence. Neglected areas with chronic poverty are more susceptible to Maoist violence. For example, of the 25 least developed districts, 17 are hotbeds of Maoist insurgency. Only one of these is in the east, and it is interesting that during the last 12 years the country was ruled for almost 10 years by elected easterners.
Reforms to bring about regional balance must therefore form the backbone of a future resolution by devolving fiscal and political power to regional governments. These could be given financial incentives to develop, for example, hydropower in their regions, and allowed to retain half the proceeds to create a trust fund to spend on local development.

The bottom line is that all the constitutional forces must unite to assess their last 12 years and work towards more genuine democracy with better safeguards for the rule of law, good governance, economic freedom, free speech and social justice. Internal democracy and financial transparency within the party is as important. Liberal democracy will require the monarch to make concessions and stay inside the constitutional boundary and remain a symbol of unity. The political leadership, for its part, should show a new commitment to the national interest and accept reforms to devolve political and economic power to the grassroots.

This is the middle ground that the parties need to push to counter the extremism espoused by the revolutionaries as we work towards a new peace process, perhaps this time with the help of the United Nations and other international bodies.

Alok Bohara, PhD is professor of economics, University of New Mexico, and this article is extracted from a paper to be presented at the International Studies Association Convention in Montreal next March. [email protected]