This fairy-tale kingdom gone awry, perched among the world's most spectacular mountains, is once again seething with intrigue and rumor, caught in dramas involving its monarchy, its striving for democracy and outside powers.
Two years ago Nepal was shaken to its core when the royal family was all but wiped out in an attack that was officially attributed to Crown Prince Dipendra, who also died. Now its citizens are wondering whether an unsteady six-month ceasefire with Maoist guerrillas can survive during off-and-on peace negotiations.
There is an ever-shifting struggle here among three power centers: the Hindu monarchy, which has sustained the country for more than 200 years; the far weaker political parties, born in the 1990s after calls for more democracy,and the Maoists.
The US, Britain and India are pouring in aid for the government, fearful that Nepal could descend into chaos or become a haven for terrorists. But the US, which is providing US$17 million to turn the parade-ground royal army into an anti-insurgent force, may find itself backing a tough king whose democratic credentials are in doubt.
King Gyanendra, a wealthy businessman, took the throne after the palace killings as a constitutional monarch of limited powers. But now he has taken full control, dismissing parliament, putting off new elections and appointing a royalist prime minister over the objections of the major political parties.
The parties have broadly discredited themselves with corruption, ineffectiveness and revolving-door governments, and they fear that the king will make a deal with the Maoists and move them even further onto the margins of power.
"What is the king's role?" Girija Prasad Koirala, leader of the large Nepali Congress Party, asked at a recent party gathering.
"I conclude that these are parts of the design already reached between the king and the Maoists," he said.
During the ceasefire, the Maoists became very public, opening an office in the capital, holding rallies and giving speeches. Then in the middle of last month the office was closed and the Maoist leaders dropped out of sight. Later the Maoists sent a message to government mediators demanding to deal directly with the king.
"A strange phenomenon in a very strange country," a Western diplomat said.
A Nepalese journalist, Mana Ranjan Josse, said: "Seeing is not believing here. Everything is not what meets the eye."
The Maoist rebellion in the countryside has its roots in complex religious, ethnic and tribal realities, along with deep poverty -- per capita income is US$220 a year and even less in remote areas -- and the concentration of the meager resources in a few hands. About 85 percent of the 24 million mostly poor people are Hindu. The top two castes, 29 percent of the population, hold most of the government jobs.
The Shah family, which founded the Nepalese kingdom in 1768, and the Rana family, which ruled through hereditary prime ministers from 1846 to 1950 with the king as a figurehead, have intermarried so much that they have formed an aristocracy that controls much of the wealth.
"The reasons for discontent are real," the Western diplomat said.
But he was critical of the guerrillas nonetheless.
"When the Maoists started," he said, "they got a lot of sympathy from intellectuals, but it has dissipated because of their brutality."
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