Over dinner in Kathmandu, my friend was becoming increasingly agitated. It was not the fate of her own business - high-end fashion design and retail - that concerned her most, though a winter-long electricity shortage that had blacked out the Nepalese capital for nearly 19 hours a day had crippled it, along with many others. Her biggest worry was the fate of the business belonging to a Tibetan friend.
The Tibetan ran a successful furniture factory that gave much-needed work to several dozen employees. One day, 40 armed Maoists turned up at the factory, roughed up some of the workers and made two demands: for an exorbitant contribution to party funds, and that all the factory workers join the union. None of the staff wanted to join. The factory owner, who enjoyed a good relationship with his workforce, was equally unenthusiastic. The "union", everyone knew, was a device to establish a Maoist presence in the factory. Once installed, the union would insist on recruiting Maoist cadres to the workforce, whether they were trained or not, to ensure that the party's writ would rule in the enterprise. The factory owner closed down his operations and took an unscheduled holiday. When he returned to restart his business, it was with a militia, assembled for his protection against further Maoist visits.
Since their departure from government early in the summer, after a single, ineffective year in power, Nepal's Maoists have been noisy on the sidelines, organising demonstrations and strikes and replenishing party coffers through their own brand of extortion. They had signed a peace agreement in 2006, following a decade of armed insurgency, and emerged as the largest single party in Nepal in the constituent assembly election in April last year.
In August, the Maoist leader, Pushpa Kamal Dahal, popularly known as Prachanda, was appointed prime minister of a coalition government. The Maoists remained the dominant party of government until May this year, when Prachanda tried to sack the head of the Nepali army, General Rookmangud Katawal, on the grounds of insubordination.
It seemed like an unnecessary quarrel to pick, given that the general was due to retire four months later. Prachanda, however, chose to force the issue of the integration of Maoist fighters into what used to be the Royal Nepal Army. The "Royal" was dropped when King Gyanendra was deposed in May 2008, but the army's attachment to the interests of Nepal's old ruling class was not lost. Faced with Katawal's reluctance to admit the Maoist combatants to the army, Prachanda insisted that the principle of military obedience to civil authority was at stake, even though the army had pledged loyalty, for the first time in Nepal's history, to the elected government. When his coalition partners backed away from the confrontation and the president, Ram Baran Yadav, countermanded the dismissal, the Maoist-led government collapsed. Prachanda resigned, leaving Nepal in the hands of an unwieldy coalition of 22 out of Nepal's 24 political parties.
The peace process is now in a precarious state. Certainly the central elements of the peace accord - a new constitution to follow the ending of the monarchy, and the proposed integration of the Maoist fighters into the army - have all but stalled. Complaints by the army that many of the 19,000 fighters were underage and underqualified were fuelled by a leaked and widely televised video of Prachanda apparently boasting to his supporters in January 2008 that he had deceived the UN special representative charged with guiding the peace process about the size of the movement's army, and that he regarded the integration of the Maoist ranks into the army as a means of politicising the military. Against this background, settling the outstanding accounts of the decade of violence - the still-unexplained disappearances and human rights violations on both sides - remains a remote prospect.
Mutual suspicions could bring about the outcome that everybody claims not to want - a return to authoritarian rule, either through the Maoists or following an intervention by the army, which has so far resisted the call to reduce its ranks to a size appropriate for a poor nation that is no longer at war. If the Maoists, who believe they have earned the right to political supremacy through both military and electoral success, feel unfairly excluded from power, a return to force cannot be ruled out. Equally, if the army and its supporters feel that the Maoists' real game plan is to establish the Leninist party-state, it might be moved to "save" democracy.
Mosaic of cultures
Democracy is not an easy proposition in Nepal. Many of the country's political parties - even the relatively disciplined Maoists - are racked with internal divisions, and defections are common. These tensions are acted out daily in the constituent assembly, which has set itself a deadline of next May to complete the blueprint for Nepal's political future. To do that, it must choose between a presidential or a prime ministerial system and determine what degree of autonomy Nepal's 100-plus ethnic groups can hope for.
General de Gaulle once remarked that it was impossible to govern a country that has 246 different kinds of cheese. Nepal, with 126 languages, presents an even greater challenge. The country's mosaic of peoples and cultures has been dominated for the past 300 years by the Brahmin and Chhetri castes, which have monopolised power in the army, the economy and political life. The overthrow of that dominance in favour of a system which would give equal opportunity to other groups was one of the promises held out to lower-caste Maoist fighters by their Brahmin leadership. Many already feel that the promise has been broken.
Every day there is agitation by one group or the other, anxious that such promises will be forgotten in the horse-trading around the text of the new constitution. Following the conflict, there is a new assertiveness on the part of some powerful minorities, notably the Madhesis who live in the baked plains of the Terai, terrain that merges seamlessly with northern India across an open border. The Terai covers one-fifth of Nepal's territory and contains 70 per cent of its industry, but armed and militant groups now call openly for independence from the mountainous parts of the country, with which they feel little in common. Migrants from the hills, many of them refugees from the fighting during the insurgency, are harassed in the Terai, both by armed political groups and by criminal gangs that make a living from kidnapping and extortion. The hill people are not the only victims: factories are also closing as businessmen flee the troubles.
As the ragged government stumbles on, locked in endless negotiations over the minutiae of the division of spoils, the people become more anxious and more impoverished. Nepal has the lowest per capita income in south Asia, with 80 per cent of the population making a difficult living from the land. Only 15 per cent have access to electricity and that has become increasingly unreliable. Climate change is already having an impact on the livelihoods of some of Nepal's poorest people, subsistence hill farmers, who are faced with new pests and diseases and failing crops. Two million Nepalis, out of a total population of 28.5 million, currently receive UN food aid and the government has asked for twice this number to be included. An unusually dry winter presages a low harvest for next year; a second dry winter would repeat last winter's power failures, as the rivers run too low to generate the hydropower on the which the country depends.
Peace has brought no relief from the burden of military spending: the current budget includes an increase of 27 per cent for a military that already enjoys a larger share of national revenues than the collapsing power sector, agriculture or health. Without the remittances sent home by millions of Nepalis working in construction gangs in the Gulf or serving in the British army, Nepal would be bankrupt.
Between China and India
In recent weeks, thousands of Maoist supporters have rallied in Kathmandu against President Yadav, accusing him of undermining the authority of the civilian government. Prachanda has threatened a campaign of disruption unless the party is allowed to return to government and the powers of the president are debated in parliament. Such threats merely reinforce suspicions that democracy, even in its imperfect, Nepali form, would not be safe in Maoist hands.
A further political problem is Nepal's growing role as a proxy theatre for the rivalry between Asia's emerging giants, India and China. In his brief term as prime minister, Prachanda ruffled feathers in India by making his first foreign visit to Beijing rather than to Delhi. Although Nepal's Maoists have little in common politically with today's turbocapitalist Chinese, Beijing seems happy to take advantage of the invitation to establish a larger presence in the backyard of its rival power.
Nepal's border with Tibet has been a favourite escape route for Tibetans fleeing their homeland, and the government in Beijing says it suspects Nepal's large and lively Tibetan exile community of anti-Chinese activities. Beijing's relatively modest investment in Nepal has paid dividends in tighter border surveillance and stricter controls on the refugees. For India, at odds with China over their long and still disputed border, and anxious about connections between the Maoists and India's own Naxalite insurgency, the signs of Beijing's increasing influence are deeply unwelcome.
For the Nepalese people, sandwiched between two competing giants, there is little relief. Neither the army nor the police, despite generous budgets, provides protection against disaffected armed groups. For these violent gangs, as for a corrupt and underpaid bureaucracy, for Nepal's political parties and for the police, citizens are cash machines, vulnerable to extortion and expected to offer bribes for everyday services. For these citizens, who have repeatedly taken to the streets over the years to demand democracy, a state that guarantees security, equality and opportunity remains a dream.
Isabel Hilton is editor of chinadialogue.net.