Massive torchlight parades, clashes between the police and demonstrators, vows to bring the Nepalese government to its knees, a tottering United Nations peace process, and barely concealed great-power sparring between China and India. Clearly, Nepal is in crisis.
This week, a branch of Nepal's Maoists declared the autonomy of the Nepalese state of Kirat, a move that might lead to the total collapse of the Nepalese peace process and the return of the Maoists to insurgency against the central government:
The agitating Unified Maoists' Party has declared the Autonomous State of Monday, November 9, 2009. The Maoist Party politburo member and the coordinator of Kirat State Uprising Committee, Mr Gopal Kirati, amid the presence of hundreds of Maoist cadres, had made the declaration in Diktel of Khotang District. 
So far, Western media have reported remotely and somewhat uncomprehendingly on the massive demonstrations in Kathmandu led by the Communist Party of Nepal (Maoist), with a marked lack of interest. This perhaps reflects the shared desire of the Indian, Chinese and Western governments not to inflame the situation with excessive attention and rhetoric. The CPN-M has vowed to bring 300,000 activists to the capital to shut down the government.
Inexorably and almost invisibly, Nepal has emerged as the focus of the competition between India and China to seize the strategic advantage along the Himalayas.
India moved first, helping to orchestrate the fall of the incompetent and stubbornly independent 240-year-old Nepalese monarchy in 2007. Nepal's King Gyanendra had conducted a bloody, ineffectual campaign against a Nepalese Maoist insurgency, incurring New Delhi's wrath in the process by turning to Beijing for arms.
India's foreign secretary at the time, Shyam Saran, arranged an unholy alliance of the Maoist insurgency and disaffected pro-Indian politicians in Kathmandu. This alliance toppled the monarchy and put a nascent parliamentary democracy in its place, in a scenario reminiscent of the cycle of Indian-inspired unrest that extinguished the monarchy and independence of the Kingdom of Sikkim in 1975.
It was assumed that the Maoists, author of a good number of bloody outrages during the insurgency, would emerge from Nepal's parliamentary elections as a relatively unpopular fringe party, leaving control of parliament to a melange of pro-Indian middle-of-the-road parties.
However, in a development that undoubtedly caused India a great deal of dismay and may have even disconcerted the Leninist stalwarts of the Nepalese Maoists, the 2008 elections gave the Maoists - organized as the CPN-M under their leader, Pushpa Kamal Dahal (aka Prachanda) a commanding plurality of 38%, twice as many votes as the nearest challenger.
Prachanda was sworn in as prime minister on August 15, 2008, after months of maneuvering and negotiations. Instead of paying his first official visit to New Delhi - as was the tradition of Nepalese prime ministers under the monarchy - Prachanda jetted to Beijing for the closing ceremonies of the Beijing Summer Olympic Games. He further endeared himself to China with a vigorous crackdown on anti-Chinese demonstrations by Tibetan emigres that had ignited after the unrest in Tibet and in the run-up to the Olympics.
The Institute for Defense Studies and Analyses, an Indian think-tank affiliated with the Defense Ministry,  described the accelerated bloom in Sino-Nepali relations under the Prachanda government:
In fact, 12 high-level Chinese delegations, including two military teams, visited Nepal in the course of 2008-2009. During these visits, China has repeatedly assured economic, technological and military aid to Nepal. The Maoist-led government was also asked to adopt a "One-China" policy, not to allow Nepalese land be used for anti-China activities, take strong action against Tibetan refugees and grant special facilities for Chinese investments in strategic sectors. Beijing has also initiated track-II diplomacy with Nepal and invited Nepalese scholars to undertake visits to Chinese think-tanks.
Some of the important visits from China to Nepal were:
February 25, 2009: Assistant Chinese Foreign Minister Hu Zhengyue led a 14-member delegation. February 19, 2009: Liu Hongcai, vice minister of the International Department of the Central Committee of the Communist Party of China (CPC), led a delegation to take part in the inaugural ceremony of the 8th convention of the Unified Marxist Leninist in Butwal. February 10, 2009: A high-level Peoples' Liberation Army (PLA) delegation, one of the largest delegations in two months, arrived in Nepal. December 6, 2008: Lieutenant General Ma Xiaotian, deputy chief of General Staff of the PLA headed a 10-member delegation. China agreed to provide US$2.61 million worth of security assistance to Nepal. December 1, 2008: China's Foreign Minister Yang Jiechi visited Nepal. July 24, 2008: Chinese Vice Minister for Foreign Affairs, Wu Dawei, visited Nepal. He pledged a grant assistance of 100 million yuan (US$15 million) as economic and technical cooperation. March 4, 2008: Assistant Minister for Foreign Affairs of China, He Yafei, undertook a three-day visit to Nepal.
Nepal's engagements with China have also increased manifold with the visit of delegations both at state and non-state levels. Apart from visits at the official levels, private visits by political leaders, journalists and academicians are also sponsored by China as part of public diplomacy. During these visits, Chinese authorities have reportedly assured all kinds of support to the Maoist government in its efforts aimed at laying the foundation for a "New Nepal".
For the Nepalese Maoists, growing Chinese engagement is a win-win situation in line with their "policy of equidistance", which has been deliberately adopted to counter-balance India's influence in Nepal.
The increasing level of bilateral engagement also indicates that China is wooing Nepal as a new strategic partner. This has been confirmed by the statements made by various Chinese officials. For example, on February 16, 2009, Chinese Foreign Minister Yang Jiechi said in Beijing that China would prefer to work with Nepal on the basis of a strategic partnership.
In fact, Vice Minister of International Department of the Central Committee of Communist Party of China, Liu Hongcai, said in Kathmandu in February 2009 that "we oppose any move to interfere in the internal affairs of Nepal by any force". Similarly, on November 4, 2008, Liu Hong Chai, international bureau chief of the Communist Party of China, stated, "China will not tolerate any meddling from any other country in the internal affairs of Nepal - our traditional and ancient neighbor.
In passing, it should be noted that the Nepalese Maoists are not enamored of post-Mao Chinese communism, describing it as "revisionist". Their distaste for China's current leadership was reinforced by the fact that China sold arms to King Gyanendra to combat their insurgency.
The Nepalese Maoists, together with Peru's ferocious Shining Path insurgents, have affiliated themselves with the Revolutionary International Movement, organized by American Marxist Bob Avakian.
Avakian supported the notorious Gang of Four in China and left the United States for France to avoid criminal charges after an obstreperous demonstration in 1979 at the White House sought to disrupt paramount leader Deng Xiaoping's visit.
Prachanda considers his "Prachanda Path" as embodying the line of pure ideological succession from Karl Marx, Vladimir Lenin and Mao Zedong, and the CPN-M's reachout to China was very much a matter of geopolitical necessary, not ideological affinity.
Prachanda had also stated his intention to renegotiate the friendship treaty between Nepal and India, characterizing it as "unequal".
In January 2009, he also raised India's ire in a row over the Pashupatinath temple in Kathmandu.  The Hindu temple of Lord Shiva is a UN Educational, Scientific and Cultural Organization World Heritage site and also served as the seat of Nepal's national deity.
Traditionally, its priests have been Brahmins from south India, but the CPN-M government engineered their removal (with a helping hand in the form of a mob allegedly provided by the Maoists' militant Young Communist League) and replacement by Nepalese priests. Much unhappiness ensued, with the Indians joined in their outrage by ex-king Gyanendra. In the wake of an unfavorable Supreme Court ruling, the Indian priests were reinstated.
The CPN-M government finally came a cropper in May 2009 in a dispute over the resistance of the army chief, Rookmangood Katawal, following the prime minister's orders on the matter of bringing new recruits into the Nepalese army - a sensitive issue that affected the clout and integration status of the Maoists' forces under the peace agreement.
Prachanda removed Katawal, but President Ram Baran Yadav reinstated him the same day. Prachanda declared Yadav's move unconstitutional; the Maoists withdrew from the government and went into opposition. Madhav Kumar Nepal, former general secretary of the Communist Party of Nepal (Unified Marxist-Leninist) took over as prime minister.
Beyond the maneuverings and disagreements - exacerbated by the ambiguity of the peace agreement, the bad faith and suspicion by all parties and, one would speculate, India's desire to wedge the CPN-M's support and cobble together a pro-Indian majority in parliament - was the shadow of Sino-Indian competition.
The Nepalese army enjoys close relations with its Indian counterpart, and Katawal was seen as a pro-Indian force in Nepalese politics.
India assiduously tends to its relationships with pro-Indian politicians inside Nepal and the current government is identified as pro-Indian. Even the CPN-M is rumored to contain pro-Indian assets or even factions.
The current pro-Indian government has attempted, with little success, to soldier on without the CPN-M. Nepal has suffered through six months of political gridlock as a result.
The Maoists have insisted they will not return to parliament until the principle of "civilian control" - apparently the supremacy of parliament and the prime minister over the president - is acknowledged.
Prachanda visited China in October at the head of an eight-person CPN-M delegation. It held four rounds of talks with the CCP. In a rather remarkable display of consideration towards an opposition party leader, Chinese President Hu Jintao hosted Prachanda as guest of honor at China's 11th National Games in Shandong and met with him privately for 25 minutes.
It is unclear what explicit or implicit encouragement Prachanda received from China. Beijing is probably not interested in inflaming its tense relations with India by openly taking sides in the current crisis.
After Prachanda's visit, the Telegraph Nepal reported :
[Prachanda] revealed that "China has the support to the agitation sponsored by his party". Prachanda also revealed that he has brought only positive thinking from his week-long trip to China.
"The outcome of my visit to China is that we need not focus ourselves on agitation and war rather focus on development and peace," Prachanda added. He ... maintained that the Maoists' party agitation enjoys the Chinese support. He however did not reveal what sort of support will the Chinese regime extend to the Maoists' party of Nepal in their so-called agitation.
What undoubtedly concerns the CPN-M's adversaries inside Nepal is the fact that Prachanda has the resources and ambition to drive events inside the country, even if he is bluffing about the extent of his Chinese support.
Telegraph Nepal's report that Nandkishor Pasan, the commander of the Maoist's military force, the People's Liberation Army, is now in China and that a key CPN-M military strategist also plans to go to China does nothing to dispel the impression that Prachanda enjoys China's support for his actions.
In any case, after his return to Nepal, Prachanda announced a program of mass action designed to bring the government to heel and facilitate the CPN-M's return to the government under favorable conditions. The CPN-M organized mass demonstrations around the country, cutting the highway links between Kathmandu and outlying districts, and leading confrontational marches to the government secretariat, the Singha Durbar.
The Maoists also received support from a surprising source, the United Nations. The UN, concerned that Nepal will be unable to generate a new constitution, that the peace process will collapse, and that the aggrieved Maoists will restart their insurgency, has urged the present administration to back down and form a government of national unity with the Maoists.
UN Secretary General Ban Ki-moon's remarks at the end of October in support of a national unity government , made in response to a request to extend the mandate of the UN Mission in Nepal, which is trying to supervise the integration of Maoist forces into the army under the peace agreement. were construed as interference in Nepalese affairs by the current government.
Ban's remarks no doubt irritated India and the United States; the US, while keeping clear of the Nepalese imbroglio and supporting the UN process, is undoubtedly not pleased at the prospect that the Nepalese Maoists - still on the State Department's terror list - will come out on top again.
Now, it is reported that Prachanda approved the declaration of autonomy in Kirat. By doing so, the CPN-M has inched up to, if not actually crossed, a red line that might trigger the collapse of the peace process and a return to the insurgency.
1. Autonomous Kirat State declared in Nepal Telegraph Nepal, November 9, 2009.
2. Nepal: New 'Strategic Partner' of China? Nihar Nayak, March 30, 2009.
3. Protesters attacked at Pashupatinath temple Headlines India, January 5, 2009. 4. Nepal Maoist's Agitation Enjoys China Support: Prachanda Claims Telegraph Nepal, October 21, 2009. Peter Lee writes on East and South Asian affairs and their intersection with US foreign policy.
http://www.atimes.com/atimes/South_Asia/KK14Df01.html Sino-Indian rivalry fuels Nepal's turmoil By Peter Lee