Exactly one year after the collapse of the last ceasefire, the Maoists are testing a blockade on Kathmandu to pressure the palace. This is a move fraught with danger for both sides: the Maoists must win and the army must try to keep a vulnerable highway artery open.

Kathmandu has seen sieges in the past: Prithbi Narayan Shah strangled the Valley before conquering it in 1760s, and in 1988-89 Kathmandu suffered an Indian blockade.

This is ideal terrain for a siege: the narrow Nag Dhunga pass is the only road to the plains. As the first three days have shown, the Maoists don't need to physically have guerrillas blocking the road to stop traffic.

Putting the pressure on Kathmandu is a way for the Maoists to assert their presence after their central command was nearly wiped out by the security forces over the past six months.

Two months after coming to power, Prime Minister Sher Bahadur Deuba has been stonewalling on peace despite pressure from his UML coalition partners. The blockade has put the government on the defensive, but may actually have strengthened its resolve not to give in.

Deuba's stand has been that he will not agree to talks just for the sake of talks. To this end, he has set up a plethora of agencies: a high-level peace committee, a Peace Secretariat, a working committee for the peace secretariat, a multi-party democratic coordination committee. The working committee is to be formed by the high-level peace committee even though a peace coordination committee formed by the past government already exists at the prime minister's office.

All this is sounding like a farce to many peace activists. UML members realise that Deuba is running circles around them, but can't do much. In fact, UML has now switched to blistering attacks on the Maoists for being anti-peace.

The government has said it is in touch with international conflict experts. "We have been consulting with them ," says Information Minister Mohmmad Mohsin. "Once the Peace Secretariat is set up, we will produce a dossier based on their ideas." The army is happy with this sort of vagueness. Senior brass told us they have no intention to go for a truce now: blockade or no blockade. But that may actually depend on how tight the Maoist blockade will be and how long it will last.

New Delhi is learnt to be monitoring the blockade and the forced closure of businesses having Indian investments with growing alarm. Indian Foreign Secretary Shyam Saran met Nepal's envoy in New Delhi Karna Dhoj Adhikari on Wednesday to express concern. The Indian press reports Deuba is to visit New Delhi on 9 September.

(Reporting by Navin Singh Khadka)