Despite a public war of words between the prime minister and the rebel leadership in the past weeks, sources say both sides are privately committed to the peace process and want it to succeed.

The strong rhetoric appears to be an outward manifestation of the tough bargaining going on in back-room negotiations between the two sides. The government, under strong pressure from the international community, wants Maoist demilitarisation to take place first. The rebels are sticking to their guns and want progress on political issues like the passage of the interim constitution and formation of an interim government.

"The reason Koirala is so forceful and confident on weapons is because he knows he has support from India and the US," says one Baluwatar insider. Kathmandu-based diplomats say the Maoists have got the message-the international community just won't agree to armed Maoists in government.

But civil society groups say putting too much pressure on the Maoists now may weaken the rebel leadership's hold over its own hardliners and lead to a return to war. But the anti-government stance of the civil society and their silence over recent Maoist killings have exposed them to criticism in the party press of being rebel mouthpieces.

The Maoist strategy seems to be to use the weakness and disunity of the seven-party alliance and gain maximum concessions. The result is that the pre-April polarisation between the king and the 7+1 party-Maoist alliance has now been replaced by a growing schism between the Maoists and the parliamentary parties.

The weekend of anarchy over the fuel price hike was essentially Maoist-affiliated groups competing for supremacy against student unions affiliated with the political parties. The Maoist student union bussed in hundreds of high school students for a demonstration on Tuesday outside army headquarters.

This is becoming a power struggle between the parliament and the street. The rebels who have no presence in the house are flexing their muscles on the streets. On Friday, the interim constitution drafting committee will present its draft to the negotiating teams and there will be a decision on Maoist cantonment sites.

The Maoist leaders would have liked an interim government with them in it to take these decisions, but there is no chance of the rebels being in government until they renounce arms. So the rebels have raised the ante by talking about \'peaceful urban uprising\', \'October revolution\' or \'Jana Andolan III\'. Sunday's conflagration could have been a dress rehearsal for future street protests.

All this comes amidst reports of harassment of political workers, stepped-up extortion and forced recruitment of teenagers. One businessman in Kathmandu received a letter from a Maoist group this week asking for "a voluntary contribution of 43 lakhs", and trekking lodges in Jomsom have been hit hard by a Maoist extortion drive.