Nepal's donors who have taken a strong line against King Gyanendra's February First move will meet soon to decide on future aid to Nepal.
Despite the sharp rhetoric, they appear torn between using the aid leverage to push the king to roll back February First while maintaining humanitarian and development assistance to Nepal's poorest and the army's counter-insurgency capability.
The government is putting on a brave face. First deputy chairman of the council of ministers, Tulsi Giri, told us: "If they don't understand, we're not going to go down on our hands and knees to grovel."
King Gyanendra hasn't yet met key ambassadors who returned after consultations in their capitals last week. But he did summon editors on 25 February to signal donors they should choose between "terrorism and democracy". The king added: "We need our friends to help us in word and deed, if fighting terrorism is not their agenda, they have to tell us what is."
British ambassador Keith Bloomfield flew back to Brussels to attend a high-level European Union meeting on Thursday that is charting a common line on the crisis. Nepal's main donors are meeting again in London on 15 March to harmonise their positions. Nepal's human rights record will also come under international spotlight later this month at the UN in Geneva.
China, Pakistan, Russia and other Asian governments have said it is an internal matter, but Nepal's main donors say the king's move will make it more difficult to resolve the insurgency. The question is what to do about it. Britain signaled its displeasure by suspending military aid but army sources pooh-poohed it saying hardware in the pipeline was not substantial.
Bilateral donors want to link future aid to release of political detainees, lifting the emergency and restoration of civil liberties. But they add taking hasty decisions may hurt those in need.
"There are lots of poor and excluded people.and nobody wants to put them under greater pressure or reduce the impact on poverty," Robert J Smith of the British aid group, DfID told us.
Other donors have suspended some projects and say they will channel money through civil society.
"We will not be signing any new project or program agreement with the government until further notice, but our support for the work NGOs and civil society has not been directly impacted," said Martin Hermann of the Danish Embassy.
However, the government says it wants INGOs to re-register and work only with vetted groups, saying funds need to be monitored so it doesn't get into the wrong hands. Donors find this unacceptable saying they may pull out if the rule is enforced.
Not all donors have been as tough, and multilaterals have taken a softer line. The Japanese are expected to announce two agriculture projects next week. The World Bank said it was "postponing" a $70 million tranche of its anti-poverty budgetary support, but this had already been decided in December because of previous governments\' failure to meet reform targets. The ADB clarified this week it wasn't stopping its projects, but field activities would be determined by the security situation.
Reporting also by Naresh Newar