The ceasefire is off, the country is back at war. We seem to have come full circle to 25 November 2001 when the first truce was unilaterally broken by the Maoists after three rounds of fruitless negotiations.

At that time the Maoists took the war onto a new level by attacking the army base at Ghorahi, inflicting huge losses. This time, they have already given us a hint of what lies in store: a campaign of assassinations and bomb attacks right here in the capital, designed to spread panic and fear. Unlike previously, most of the ambushes and raids on police stations in the past two weeks have taken place in daylight, indicating a greater confidence among the Maoists about their ability to make their getaway and melt back into the population. The blasts and assassinations of the past weeks could be a warm-up exercise for the big ones expected as precursors to the three-day national strike on 18-20 September, 2003.

Meanwhile, in the midwest fierce frontal battles continue, with the army even using helicopters for airborne attacks on Maoist positions. Although the army's intelligence about Maoist hideouts and movements seems to have improved, the assassination of its senior psywar counter-insurgency expert in Kathmandu shows that it is still deficient.

Curiously, the Maoists appear to be holding back from launching a full-scale offensive on military targets in the Kathmandu Valley. This could be because they are waiting for the political parties' agitation to be over, or it could be that they feel their present strategy of high-level assassinations, national strikes and terror tactics will suffice to soften the hardline stance of the state on the issue of a constituent assembly to craft a new constitution.

As usual, as with all the goings-on in Kathmandu, international geopolitics casts a long shadow. The Maoist leaders did let it slip out when they briefly surfaced that they had been 'let down' by India, even though New Delhi doesn't figure on the list of five points that Baburam Bhattarai gave this week for why his group called the ceasefire off. This could have something to do with the fact that CP Gajurel, the senior Maoist who was caught trying to fly to London on a false British passport last month, is still in Indian custody.

They have also been sharply critical of 'imperialist' America, and suspect the US could play a role similar to Peru in 1992, when they helped security forces to apprehend Abimael Guzman in 1992 just as his Shining Path movement was about to launch an urban guerrilla war on Lima.

The Maoists are still playing the palace against the parties according to Mao's dictum of "divide the enemy and take the war forward", and by doing so are also trying to play India against the West. In their analysis, India supports the parties whereas the US and UK are sympathetic to the king.

The reported convergence of Indian, British and American interest to get the palace and the parties together means that there is now considerable international pressure to ensure that the situation in Nepal doesn't spiral out of control. The fact that Nepal was pretty high on the agenda of US Undersecretary of State for South Asia Christina Rocca during her visit to New Delhi must mean that the Americans and Indians are making efforts to coordinate Nepal policy.

Senior British officials who met King Gyanendra during his recent visit to London have reportedly advised that a rapprochement with the parties is not only desirable but essential in order to bolster the strength of constitutional forces against the Maoists. Interestingly, Western support for the king, the Maoists' insistence that they want to negotiate directly with the king, and the parties targeting the king in their street protests all have the same net result: it puts the king firmly into the political mainstream. Everyone within Nepal and outside seems to be waiting for King Gyanendra's next move.

The three-pronged battle for state power is deadlocked because each needs the help of the other to isolate the third, but none can agree on the terms because everyone wants to gain overall control over the others. There are few signs of a tripartite or even a two-way agreement between any of the factions. The anti-monarchist Maoists and the king appear to have irreconcilable differences, but the king and the political party leadership could strike an accord if only the king gave the green light and agreed to bring the parties back within a constitutional framework.

The Maoists want a safe landing, but they can't agree to anything less than a constituent assembly since otherwise they will find it hard to explain to their own cadre what all the fighting was for. Both sides realise that there may be a military victory in this conflict, but it will leave the country in such ruin that it won't matter who won.