Nepal is in turmoil and the monarchy is in question. King Gyanendra had calculated that his authoritarian moves since October 2002 would return order to a land wracked by Maoist insurgency and political instability but he has failed. The seven months since the royal coup have seen security degenerate under a royal government with no plans for peace and democracy. The Maoists seized the initiative by announcing a unilateral three-month ceasefire on 3 September 2005. The international community needs to recognise that its calls for palace/ political party reconciliation as the sole path toward stability are unrealistic. New lines need to be explored, beginning with support for the ceasefire and the tentative dialogue underway between the parties and the Maoists.

The king's actions have marked the definitive end of the old status quo. There is no prospect of a stable balance of power between palace and parties. The monarchy retains control of state instruments, crucially the army, but it has alienated other natural allies and prompted swelling republicanism. The Maoists are militarily strong and control much of the countryside but have failed to win popular support. Mainstream parties offer the hope of representative leadership but have lost legitimacy and must make difficult decisions about the monarchy and the Maoists. Civil society is finding a voice but cannot supplant the parties and will struggle to play a decisive role on its own.

History may credit Gyanendra for forcing the pace of political developments, albeit not as he had hoped. While endangering the future of the monarchy, the royal coup has prompted a healthy clarification of positions and acted as a catalyst for Maoist-parties dialogue. But there are many dangers. The Maoists are strong and determined, possibly serious about peace talks but also reluctant to give up the advantages they have won through force. The monarchy is weakened and in a corner; as pressure mounts the king, backed by the army, may stage a further, more brutal, crackdown on the mainstream opposition. The political parties' unity is fragile, and they have to reengage with their public while treading a careful line between two armed forces hostile to democracy.

The final pattern of the fallout from the royal coup has yet to become clear but some trends are identifiable. The Maoist-parties dialogue has been boosted by the ceasefire announcement. So far it has set modest aims, with no illusions of instant solutions, but it has made some progress on building confidence and developing an agenda. Popular support for a monarchy that has failed to deliver peace or prosperity is declining. Political activists have already been joined on the streets by other protestors, and mainstream dissent will certainly grow. The mainstream parties will have to struggle to regain mass support.

The death rate from the conflict has risen, with 1,574 fatalities reported from January 2005 through June and major clashes in the following two months. If the Maoist ceasefire is not reciprocated or does not hold there is potential for further escalation. Meanwhile, both the economic and humanitarian situations have deteriorated.

The international community's one-point policy of urging the palace and parties to cooperate was reasonable as long as there were realistic indications they might oblige. However, the king's actions since February 2005 have produced a political sea-change, with moderate parties moving toward a more republican stance and the Maoists urging them to negotiate. Nepal's most influential friends need to engage in a serious rethink. They should:

• welcome the Maoist ceasefire and urge its indefinite extension, government reciprocity, and that all sides in the conflict seize the opportunity for substantive talks;
   
• continue suspension of military aid in order to maintain pressure on the royal government to restore democratic governance and explore all avenues to peace talks;
   
• replace the traditional insistence on a constitutional monarchy alongside parliamentary government as the sole path to stability and democracy with an unequivocal focus on democracy -- with or without the king -- and a negotiated peace;
   
• work towards better international policy coordination, especially between India, the U.S., the EU and the UN, preferably in the form of a loose contact group;
   
• hold a follow-up to the 2002 London International Conference on Nepal, bringing together all major players to chart a course towards a principled, democratic peace and ensure basic unity of purpose;
   
• support the UN human rights monitoring mission with money and political backing; and
   
• support mainstream, non-violent democratic parties, helping to protect them against attacks from both armed sides and planning for a potentially difficult transition to democracy.

There can be no return to the status quo before the 1 February coup. Nor can there now be any easy return to the political institutions of the 1990 constitution. The king has made clear his desire to take Nepal back to the absolute monarchy of the 1960s, while the Maoists insist on moving straight to a constitutional revision process. King Gyanendra's refusal to go back on any of his controversial steps, however many diplomatic exit routes he is offered, has reduced the chance for compromise. The mainstream parties' suspicion of the king's intentions and their consequent willingness to envisage abandoning the monarchy make a palace climb-down risky.

The king may yet give in to pressure to reinstate democratic institutions but his instinct is to see out his all-or-nothing gamble. He may find that he has been outflanked by both the Maoists and a resilient political mainstream that still embodies most Nepalis' desire for peace and democracy.

Kathmandu/Brussels, 15 September 2005