The government has got its work cut out: draft a new constitution, re-structure the country along federal lines and deliver on development. And it has less than two years to do it. These tasks are huge challenges not just because of domestic politics but complicated geopolitics as well.

The notion of self-determination within an ethnic federal framework has now taken root in the psyche of Nepali activists, and a cosmetic territorial federalism will not meet the aspirations of Nepal's identity politics. The demands have also gone beyond the ability of the mainstream political parties to fix and the agenda is being set by pressure groups outside the elected assembly.

We already see evidence of these fissiparous tendencies in the demand for one Madhes, the agitation for autonomy in eastern Nepal and the stirrings among other nationalities. These groups are now openly threatening a return to armed struggle if their demands for self-determination are not met. The precursors of future ethnic conflict are being laid, the question is?how are we going to respond to this and prevent the country from being consumed by potentially virulent ethno-separatist wars?

Nepal's ethnic mosaic and the geographic spread of various groups means that they do not form a sizeable majority in any region, even in areas where they are dominant. A federal structure along ethnic lines would spell disaster as ethnic exclusivity becomes a political slogan. Experts have argued that even territorial federalism would lead to a violent disintegration of the Nepali nation. Issues that should be discussed with cool heads by sociologists and demographers have entered the volatile political discourse. An issue as sensitive as this can't be resolved with political rabble-rousing on the streets.

The demand of Nepali society is for the transformation of the socio-economic system under real decentralisation of political and economic power so that the marginalised are recognised, represented and given control over their own destiny. This should be achieved with minimum instability, and maximum sensitivity. Mixing identity politics with this is playing with fire.

Geopolitically, there is considerable disquiet among our neighbours about the whole concept of federalism. China is worried about how a federal Nepal with the provision of ethnic self-determination will impact Tibetan nationalism. There is also concern that self-determination is a western-supported and funded agenda. The Chinese have historically felt more comfortable dealing with a powerful centre in countries on its periphery.

A federal Nepal is not in India's long-term security interest either. Ethnic federalism with a right to self-determination could have crossborder repercussions on the Gorkhaland movement, India's northeast and the Tarai ethnicities across the border in Bihar and Uttar Pradesh. India is also wary of how the Maoist victory in Nepal will play itself out among its own Naxalites, and their demand in some states for indigenous and aboriginal rights.

The Europeans and Americans seem to view federalism favourably and feel decentralised decision-making could favour development. But there are serious doubts even among them about sustainability and viability of the federal structures.

Some of the demands of ethno-federalists in Nepal are being supported by Western governments and INGOs. Even when some of these groups publicly espoused violence, their funding continues.

The question that must be asked is why the Maoists have allowed themselves to become tools of 'Western imperialists' by favouring ethnic federalism. After all, Marx always favoured real socio-economic transformation through decentralisation. The truth, perhaps, is that Nepali Maoists are not Marxists at all. They are extremists and there is an unholy alliance between the extreme left and the extreme right.

Pushkar Gautam is a leftist thinker and former Maoist area commander for Okhaldhunga. He wrote regular opinion pieces for Nepali Times between 2001-2004.