I first visited in the monsoon of 1973. This monsoon I spent three months in Kathmandu, a city I have loved since.

The Kathmandu Valley is no longer a serene, emerald valley. Even Nepal has been infected by terrorism and militarism, urbanisation, and environmental decay.

A pall of despair hovered over the valley as I prepared to leave as news came in of serial bombs.

Despite all this, there is optimism and hope that Nepal will survive the present crisis of governance and forge a new identity for the 21st century. Why? Because Nepal is unique. The slim slice of earth that comprises the nation state of Nepal contains one of the world's oldest and most sophisticated civilisations in an ecosystem from Chomolungma to the Ganga plains, equal to the Amazon in water power and diversity of species.

Nepal is also unique as a political entity. The Himalayan Belt, once a chain of independent kingdoms reaching from Bhutan to Ladhak was crushed by the 20th century. Nepal is the only sovereign state left between India and China.

Development economists rank Nepal as one of the world's poorest nations on earth, and it is painful to see millions of citizens trapped in a crippling poverty cycle. But culturally Nepal is one of the world's richest nations. The people are as gifted as they are diverse, world renowned scholars, authors, and artisans. Their religious and cultural tolerance is astounding. Farmers recite poetry, philosophy, and history.

It is both a superstition and a plausible fact that Nepal's stability is sustained by the artisans, shamans, and pujaris who perform the rituals that are the foundation of daily life. Nepal's civilisation has survived centuries of regicide, regime change, famine, and flood.

Given the chance and the tools, the people of Nepal will apply their talents to their development needs, and they will prosper. Nepalis are also supremely gracious hosts, and it's no wonder that the most successful economic force in modern Nepal is tourism. It has lifted millions of Nepalis out of poverty, creating jobs, sponsorships, and exchange programs. In 2002 the US State department put Nepal on its Terror Watch List and issued a travel advisory for Americans. This reactionary policy has closed hundreds of businesses and left thousands of porters and guides are without work, isolated and vulnerable. It is also inaccurate: no foreigners have ever been harmed in the 10 years of the Maoist insurgency.

But the US travel advisory forced the withdrawal of the Peace Corps and dozens of established, popular American study programs and volunteer agencies.

Travellers serve as informal diplomats and monitors, and it is no coincidence that the forced withdrawal of so many successful American organisations had weakened the central government and emboldened the Maoist rebels.

Nonetheless, the peace process is on track and business is up by 60 percent. Young Nepali entrepreneurs have reinvented Kathmandu nightlife, which for decades was choked by miserably tacky casinos. Thamel now teems with French and Italian bistros with imported Chianti, wi-fi coffee bars, and at last, proper discos, open till dawn. Compared to an American city, street crime is nearly non-existent. The most fearsome danger for the western traveller is, as ever, a crippling bout of dysentery.

I believe that as more Nepali citizens exercise their political rights and engage in democratic processes, Nepal will reinvent itself, as it has throughout its history. Nepal should not be caustically dismissed as a failed state, as happens so casually on the Kathmandu cocktail circuit.

Nepal's lands have sustained a great civilization for over 2,500 years. Lord Buddha was a Sakya prince when most of humanity was mired in barbarism. And so I say, Jai Nepal.