Nepal is in the grip of a constitutional crisis. The drafters of the 1990 Constitution hailed it as "the best constitution in the world", ending three decades of absolute monarchical rule by enshrining a multi-party system under a constitutional monarchy. But the nine-year-old Maoist insurgency has cruelly exposed the inherent weaknesses in that settlement, and the royal coup of 1 February 2005 has dealt it a near fatal blow. Constitutional change is a necessary, if not sufficient, element for producing lasting peace. The conflict's root causes can only be addressed by structural change in the state and its governance system. Constitutional issues and the political means by which they are dealt with are crucial to a peace process.

Unfortunately, there is no sign of agreement between the king, the political parties and the Maoists on key topics. Three areas need to be considered:

• what substantive changes should be made to the constitution? Although the role of the monarchy lies at the centre of constitutional discussions, other important issues include democratic inclusion, sub-national government, electoral reform and civil-military relations;
   
• what is the vehicle for political transition? There are various possible mainstream entities -- such as an all-party government -- that could eventually negotiate a transition but there are also Maoist and royal roadmaps; and
   
• what is the process for modifying the constitution? Amendment of the current constitution by parliament or through referendum has been proposed but debate now centres on a constitutional assembly, a central Maoist demand which is now backed by mainstream parties and analysts.

Constitutional issues are at the crux of Nepal's military, political and social crises. The Maoists have called for radical restructuring of the state, including establishment of a republic, since the start of their insurgency in 1996. The mainstream political parties opposed fundamental revision of the constitution until recently but are now willing to envisage greater change, although their policies are still a subject of debate.

Even before the royal coup, the 1990 Constitution had been undermined by the May 2002 dissolution of parliament and King Gyanendra's repeated dismissals of prime ministers. Subsequent governments had little chance of conducting successful negotiations with the Maoists as long as real power rested with the palace. If the king hoped that his unambiguous seizure of full executive authority would bring the Maoist to talks, he was mistaken.

The re-introduction of democratic institutions remains central to establishing a government that can negotiate with the Maoists and initiate a consensual process for constitutional change. But the palace is more concerned with consolidating royal rule, while a broader alliance of Kathmandu-centred interests has long opposed a more equitable distribution of power.

Three vehicles for breaking the political deadlock in the capital remain:

• an all-party government without a parliament: the royal coup has increased the previously slim likelihood that the mainstream political parties might manage to form such a government. But if it is constituted by royal fiat, it would lack the legitimacy and authority to negotiate effectively with the Maoists;
   
• a government formed after new parliamentary elections: the Deuba government was tasked to hold parliamentary elections but this was never realistic. The king has announced municipal elections by April 2006 but there is no clear prospect of a general election; and
   
• a government formed after restoration of the parliament elected in 1999: the king or the Supreme Court could restore parliament, although neither seems willing. This option was seen as a partisan measure that brings no guarantees of effective governance but it has now been endorsed by a coalition of mainstream parties. A parliament restored with the limited mandate to negotiate with the Maoists on constitutional change might advance the peace process.

A government negotiating with the Maoists would have three basic options for constitutional change: parliamentary amendment via Article 116 of the 1990 Constitution; a referendum; or a constitutional assembly. In Nepal, constitutional amendment is typically understood to preclude consideration of the role of the monarchy, while a constitutional assembly is equated with republicanism. In fact, either method allows flexibility. By contrast, a referendum on constitutional issues would likely destabilise the state, rather than identify an acceptable political compromise.

Any viable tripartite process would need to allow the Maoists to argue to their cadres that republicanism was at least on the table and permit the king to feel confident the monarchy was sufficiently secure. A process in which key stakeholders have already reached critical informal agreements may be a way of delivering constitutional change peacefully, although it would have to be balanced with the need for transparency and accountability. Allowing for easy subsequent amendment would enable future adjustments.

For the time being, however, the royal roadmap -- thinly disguised by the rhetoric of "protecting the 1990 Constitution" -- appears to be one of systematically dismantling multi-party democracy while pursuing a purely military strategy against the Maoists. The options for democratically negotiated change are severely constricted. If the "constitutional forces" of monarchy and parties cannot form a common position, there may be no viable basis for negotiation with the Maoists. In this context, the Maoist roadmap of an interim government, ceasefire and freely elected constitutional assembly is likely to become the focus of increased attention. This would test Maoist sincerity but also that of the parties and the palace. Each side claims to speak for the Nepali people but none has shown much appetite for allowing the people to have a real say. Unless and until this happens, there is little chance of finding a lasting peace.

Kathmandu/Brussels, 15 June 2005