It hasn't been easy for Prime Minister Sher Bahadur Deuba to prove he is not a royal puppet and cobble together an all-party cabinet. He believes a party-palace unity is a prerequisite to peace, and he is committed to holding elections even if there is no understanding with the Maoists.
Excerpts of interview:

How do you analyse the present state of the kingdom?
Things are difficult. We are being terrorised by Maoist violence, there is a lot of misery in the villages, townspeople are victims of Maoist extortion, landmines are going off, even passenger buses are being attacked. All this has had a negative effect on the economy, tourism has been hurt, productivity and economic activity are down, hotels are being auctioned. Yes, there are major challenges for the government.

But there is no government presence in large parts of the country.
I wouldn't go so far as to say that. Things are functioning normally in district headquarters, in many rural areas service delivery continues. Yes, in many areas there are problems due to the Maoist activity, teachers are being abducted and education is disrupted, and development activity has been hit.

So what are you going to do about it?
First, I believe, the constitutional monarch and political parties who believe in the constitution have to be on the same side. We can blame a lot of people for the state of the country, but this is a situation created by the Maoists. And the only approach is to forge a common position. If the king and the parties keep quarreling, and the parties keep fighting among themselves, this crisis will only deepen.

You have taken a month to set up a cabinet, why should the people believe you?
It doesn't matter how long it takes as long as the team is strong and can work together for a solution. Despite delays, the government has functioned.

How do you assess the king's role?
I had once said that this is an ambitious king. But after my reinstatement, I have seen that the king is more concerned about strengthening democracy, ensuring Nepal's progress, stopping corruption and bolstering national unity. He wants goods delivered to the people. The king has changed, and I think he reinstated me because he is convinced that I will not waver from the values of constitutional monarchy and multiparty democracy.

Does that make your government answerable to the king or to the people?
I want to take the king into confidence and work with the people. The house is on fire, we can't keep on arguing, we have to start looking for water to put out the flames.

But the king and the parties are drifting further apart. Do you have a mechanism to bring them together?
A consensus. The UML, Sadbhabana and RPP are on board, but Girijababu hasn't agreed. He is annoyed with me, but one day he'll also agree that there is no point in confronting the king. The Maoists are a bigger problem than the king. Nothing happens to those who burn the king's effigy, but if you burn Prachanda's effigy you get killed. So, the real problem is the Maoists, not the king.

Have you seen any change in the character of the Maoists?
Their political ideology is directed by the use of violence, that power comes out of the barrel of the gun. But this ideology is obsolete, and if the king and the parties unite, we can isolate them. We don't want to finish them off, we want to force them to agree to negotiate a final resolution.

But what kind of pressure will work?
Unity between the parties and the king.

But the Maoists are adamant on the constituent assembly issue.
You can't have a pre-condition to talks. We can't make the same mistakes as we did in the previous two rounds of talks. We have to agree on a bottomline before we start negotiating. You can't backtrack once you make your commitments public. The old model of talks aren't going to work.

Any secret back channel talks going on?
No.

Is the army capable of fighting this war?
From what I know, the army has a lot of help from outside. Recently, India and the UK helped with attack aircraft, weapons, vehicles and training. The army is stronger. This war is coming to a climax. The Maoists may be able to launch a few more attacks, but in the end, they will be defeated. After peaking, their strength will wane.

How about human rights violations by the army?
Let me make it clear that the state security machinery can't behave like the terrorists. The security forces may have made mistakes. They are not divine, they lack training, they make mistakes. But that doesn't mean the entire army is guilty. Rights abusers must be brought to justice. They will be tried. Otherwise they will not be able to win the hearts and minds of the people. They are paid to serve the people, they are not paid to kill innocents.

What about India's role?
They are worried. Earlier, even we were not worried and we never imagined the Maoist threat would grow so rapidly to have a network in India too. Even the Indians never thought they would spread so quickly. Now they understand our predicament, and I have noted that they take it very seriously. They have assured us of their continued military support.

But as the army grows stronger, isn't there a danger of militarisation?
There isn't. The army doesn't have political power and they don't want it either.

And elections?
Our priority is peace. We will negotiate with the Maoists, but even if there are no talks we'll conduct elections in many phases if need be. If elections can be held in Kashmir, they can be held here.