From the vantage point of the Sanchaya Kosh building where we are, the UN complex looks like a drive-in motel. Mammoth SUVs, with extra-long radio antennae waving in the air, zoom in and out at lunch hour unless they are rudely interrupted by a bomb scare in an adjacent building. With all their frantic busy-ness, it is a miracle the underworked and overpaid aidocrats in our midst find time to get anything done. It took time off this week to tell us that Nepal has now graduated from a low-development country to a middle-development country. Some consolation.

Ever since it rose from the ashes of World War II, the United Nations never tried to be an organisation of nations. It was quite happy to be of service to its member states and their heads. Over the years, tyrants, despots and genocidal leaders have graced the General Assembly hall to pontificate while being simultaneously translated into several languages.

But at long last, the UN seems to have realised that nation-states are inherently exclusionary. By emphasising the role of 'building multicultural democracies', this year's Human Development Report 2004 finally admits that there can be no meaningful development without institutionalising inclusive democracy.

However, HDR 2004 frankly admits that it is not easy to build multicultural states. Throughout the 20th century, building cohesive nation-states with homogeneous identities remained the primary political project of human civilisation. Both Cold War rivals-USSR and USA-presented competing unitary models of state building that didn't have much tolerance for ethnic diversity.

After the Shah restoration in 1950s, Nepal did take faltering steps towards building a state-nation rather than a nation-state by adopting a democratic constitution. But King Mahendra had no patience for the messiness of parliamentary democracy. He envied the 'one language, one system, and one people' pattern of the American Empire and sought to replicate it in Nepal with himself at the centre of the enterprise.

Nation-states have traditionally emerged to oppose empire. In Nepal, the Gorkha Empire announced on 15 December, 1960 that it was going to be a nation-state and not a state of various nations aspiring for inclusive identity. King Mahendra based this Panchayat project on a model of a nation-state loyal to the crown as a unifying symbol. The more he succeeded, the more the state failed. Those who are talking about Nepal becoming a failed state now would do well to ask themselves: which state? Whose state? A large section of Nepal's population never had anything to do with the state in Kathmandu until the 1990s.

Even after the People's Movement, the political elite refused to realise that the politics of cultural exclusion was unsustainable. Attempts at language and religious plurality were repeatedly thwarted by the palace-centric state machinery. The cost has been enormous. A totalitarian ideology like Maoism has appropriated the political agenda of pluralism, and very few of us have the residual moral authority to question the inherent contradiction.

The economic effect of state policies promoting social, political, and cultural exclusion has been no less disastrous: the poorest 10 percent of Nepalis have to make do with only 3.2 percent of national income while the richest 10 percent take away nearly 30 percent of it. The richest 20 percent Nepalis, most of them Kathmandu-based, have half of national income or consumption. Cultural and class distinctions being closely interlinked, it's not surprising that the Maobadis claim to champion them even when they indiscriminately kill innocent bystanders with their bombs.

The challenge for the Narayanhiti is to prove that it can address these long standing issues of its own creation through wide ranging reforms in the system of governance. HDR 2004 has shown the way to the future: federalism, multiculturism, and democracy. It remains to be seen whether the lords of poverty will prevail upon the state to mend its ways or choose to wallow in the opulence of a subservient status quo.

Someday, the UN Complex may even begin to promote cultural liberty in Nepal. When that happens, we shall wave down at you.