Prachanda had sacked Nepal Army (NA) chief Katawal, who is considered central to resistance to Maoist attempts to seize control of the Army, after General Katawal had refused to integrate thousands of Maoist guerilla People's Liberation Army (PLA) troops into the regular Army. But the country's President, Ram Baran Yadav, a member of the main Nepali Congress opposition party, overruled PM Prachanda and told the General to stay put. This was welcomed by the other governing parties fed up with the increasingly dictatorial style of the Maoists; but as the Maoists are the majority party, the ruling Constituent Assembly is now barely functional.

Wary of each other's motives, it seems that both the NA and PLA had broken the 2006 peace agreement by beginning new recruitment - though both excused themselves by claiming that they were only filling vacant posts. All political and military factions are aware that control of the army is key to the Maoist project of eventual seizure of state power.

"In a televised address to the nation, Prachanda said he was stepping down in response to an ‘unconstitutional and undemocratic’ move by Nepal’s president to stop the elected Maoist government from sacking the army chief." This proved highly amusing when, the later that day, a video of Prachanda speaking to the Maoist guerilla PLA commanders was released anonymously to the media(1). Recorded after the Maoists had signed the peace deal and promised their commitment to parliamentary democracy, it showed Prachanda telling the faithful that this was all a clever ploy, a temporary tactical move to capture sole state power for themselves. He jokes about how they manipulated the United Nations Mission in Nepal (UNMIN) verification process of registering troop numbers, as part of the peace deal. He reveals that the real guerilla strength was only 7,000 rather than the 35,000 actually registered. This would help them later claim more places for loyal ex-guerillas within the Nepalese Army - as part of the 'integration' process - as a means to take control of it.

" ... it has revealed that the Maoists had taken a strategy to let the Constituent Assembly elections happen only if they could win. Dahal said the Maoists would let the CA elections happen only if they could smell a victorious situation. “Either we would not let the CA happen or the (Nepali) Congress would not. The CA elections will happen only in the situation in which either the Congress or we can win.”
The video broadcast by Image Television for the first time on Monday after Dahal stepped down from the government over the Chief of the Army Staff’s dismissal controversy was reportedly shot at the UNMIN monitored Shaktikhor cantonment on Jan. 2, 2008 before the historic Constituent Assembly elections.
Admitting that the real strength of the PLA was around 7000, Dahal who was the supreme commander of the PLA said the Maoists, however, managed to show the figure as 35,000 to the United Nations Mission in Nepal (UNMIN), and got 20,000 verified.
“Before the compromise was made in fact we were few. We were about 7,000,” says Dahal in the video talking about the UNMIN verification results, “We managed 35,000 in the camps and it (figure) came around at least 20,000.”
“We shall not say this to others,” the then PLA chieftain said with smiles and added, “But this is the fact.”
Stating had the party shown the PLA’s real strength after the verification the count would drop to 4000, Dahal said, “Our leadership shrewdly made up the regular army from 7,000 to 21,000,” adding, “We haven’t decreased (in number), we have increased. Moreover, we have formed the YCL [Maoist paramilitary thuggish youth wing] outside. We haven’t left that (army) structure. We have been adding up thousands there also.”
Addressing the Maoist combatants residing at the cantonment at the time when the country was preparing for the CA elections, he revealed the plan to disapprove the UNMIN verification after winning the polls. “After we win, we will not consider the verification as basis (for the army integration). We will make other provision. Why would we abide by that after we win? ... Why would we follow it when we are on the upper hand?”
Moreover, Dahal said the PLA that is politically aware can hold full control over the national army even if it gets entry in a small number. “They (Nepal Army) know only to tread boots. This is not the case with us,” he said, and argued that it was the reason for army chief (Rookmangud) Katawal to publicly speak against the army integration. (eKantipur.com - 5 May 09) "

To rob the living and the dead
Prachanda also revealed his plan that both compensation money given to the families of Maoist guerilla 'martyrs' killed in the decade of civil war - and also funds to maintain living ex-guerillas still garrisoned in cantonments under UNMIN supervision - should be divided so that 90% went to the Party to be used for funding an insurrection to seize state power.

Anybody who had bothered to compare the contradictory statements of Maoist leaders since they entered government would know that they will play up their insurrectional intentions when talking to the Party faithful (to keep them on-side and ever-optimistic of a brighter future) and play up their democratic commitment when talking to the international diplomatic community (to secure aid and investment and a secure niche in the wider geo-politics of the region). So the video revelations are no great surprise - but are nevertheless a great embarassment to Prachanda - the UNMIN, for example, will not be amused at seeing him gloating over fooling them.

In his speech Prachanda also took a quick swipe at the American Maoists of the Revolutionary Internationalist Movement, dominated by the Revolutionary Communist Party, led by the slavishly adored guru Chairman Bob Avakian; "We are members of RIM. Indian Maoists are not in RIM. The American communists do nothing but talk. Sometimes they criticise us and sometimes they support us. When they will find us joining the government, they might write some articles which I am sure no one reads or understands."

Another embarassment - if he realises it - is that Prachanda has admitted in the video that the military capability of the Maoist forces is much weaker than was generally believed. With a recent gradual slow drift away from the cantonments by bored ex-guerillas these numbers have likely decreased even further. So the Maoists' constant threat to return to civil war if they don't get their own way politically now perhaps looks less threatening. They could take up the gun again, but with even less prospects now than the indefinite military stalemate of their previous achievements. This is one reason why they are likely to look for a political solution to enable them to re-enter government.

The greater game
“it was the Indian establishment which facilitated the Maoists to assume power in Nepal through the use of the 12 point agreement that was signed in New Delhi on November 22, 2005”. (Indian foreign minister Pranav Mukherjee - January 2009)

It is regional geo-politics that has inevitably snared Prachanda. Nepal cannot escape the influence of its big brother neighbours, India and China. During the decade of Maoist guerilla war Prachanda is said to have spent much time in India being courted by Indian intelligence services. It was they who set up the 12 point programme of 2005, the peace deal that ended the civil war and brought the Maoists into alliance with other bourgeois forces against the King and led to the present Republic. This led to the Maoists' intergration into parliamentary politics. Since the Maoists' election victory they have developed closer ties with China. China has a policy of buying influence and useful infrastructure in poorer regional neighbour countries. As part of this process it funds development of transport infrastructure which has a potential dual commercial and military use. India is concerned that Nepal may become another pearl in this Chinese regional "string of pearls".

India, for historical, geographical, commercial, cultural and linguistic reasons, has traditionally had the greatest influence over Nepal. Nepalese politics has always been conducted in the shadow of Indian surveillance and Indian interests. Hemmed in by the northern Himalayas, the southern border has been the essential trade and supply route for Nepal - and India has, when displeased with Nepalese policies, shut down border traffic and so exerted its will on Nepal. So the closer ties with China has annoyed India - and it is widely believed that Indian intelligence directed the Nepalese President to block the dismissal of General Katawal. The Indian and Nepalese armies have always been very closely connected, the Nepal Army being trained by the Indians. The Indian army chief is also ceremonial head of the Nepal Army and vice versa.

"The Maoists must have now regained their lost senses in having taken India for granted. India used and overly used the Maoists to sideline the arrogant Monarch ... The Indian establishment had not even imagined that a person who resided in New Delhi for more than eight years enjoying lavish care and comfort will exhibit his intolerance towards the dictates and sermons of the New Delhi administration. (Himalayan Times - 4th May 09)"

"The fierce one" - India's lapdog
It seems that Prachanda, under pressure from his Party rank'n'file, went against Indian wishes in insisting on dismissing Katawal. This was anyway an unnecessary risk; General Katawal was due to retire in three months time. Since his resignation Prachanda has complained of those who 'serve their foreign masters'. The political establishment with close ties to India are commonly known as 'Indo-pendents'. Yet now his Indian masters have shown him who's boss, Prachanda/Dahal goes running back to them to try to placate them. He has been reminded that those who put him in power expect his loyalty and obedience;

Dahal, while, on the one hand, addressing the party mass meets criticizes the local partners for serving to their foreign masters (read India), on the other, in his talk with the Indian media revels indirectly that he is also subservient to the Indian dictates. This double standard!
In an interview with the Hindu at the Baluatar residence on Sunday May 10, 2009, Pushpa Kamal Dahal reveals that he had asked Ambassador Sood to request New Delhi to send Foreign Secretary Shiv Shankar Menon or some other senior Indian officials for talks on the increasingly tensed standoff over the sacking of the Nepal Army chief.
“We knew some confusion is there between the Maoist-led government and India on this question,” said the former rebel leader turned Prime Minister of the country.
In an attempt to appease the Indian leadership, the Prime Minister who during the decade long rebellion lived in India, also tells that the flurry of High Level Chinese delegation visiting Nepal had arrived in Nepal uninvited. A big setback to China, indeed!
“The initiative for these visits came solely from the Chinese side…mainly because of the Tibet crisis”, Dahal tells The Hindu dated May 11, 2009. (Telegraph Nepal - May 11 09)

Meanwhile the Maoists again play the anti-India nationalist card at home, portraying themselves as heroic defenders of national sovereignty - yet, as was pointed out;

a Maoist team led by none less than the party chairman Pushpa Kamal Dahal had met a high ranking delegation of India’s notorious intelligence agency RAW (Research and Analysis Wing) in July 2007 in Sikkim of India.
The crème de la crème of the Maoists leadership crossing over the Nepali territory to meet the RAW top-agents comprised of none other than Prachanda, deputy in command Baburam Bhattarai, leader Ram Karki and Nepalese expatriate leader of the Maoists Party, Hari Bhakta Kandel alias Pratik.
Mr. Pratik is an Indian national who has a house in Damak, Jhapa district.
The Maoists’ leaders had crossed the Nepali territory on July 27, 07 at around 6:00 PM and arrived in Nepal the next morning staying in the alien land for over 12 hours.
The RAW team was led by T. Hermis- the then chief of the Indian intelligence agency.
Hermis was a RAW man in Kathmandu and stayed here for over three years in the Indian embassy. Mr. Hermis is now a retired man and currently resides in Banglore.
Thus, the Maoists party’s fresh anti-India rhetoric holds no water, as they were once close to the RAW and had been told to rule Nepal. (Telegraph Nepal - May 11 09)

Since the Maoists left the government their cadres have been clearing rival political forces out of villages in their rural strongholds, under threat of death;

In Argakhachi District, a senior Maoist leader, Top Bahadur Rayamajhi ordered his cadres to capture each and every village, whip the Nepali Congress and UML cadres, those who have supported what the Maoists take as, the unconstitutional move of the President.
Leader Rayamaji has served a week-long warning to all to join the Maoist party or else face the stringent penal actions.
“If the President remains undeterred in his move, we are also ready to take-up to the arms”, Rayamajhi threatened addressing a gathering in Sandhikarkha, Argakhachi.
Innocent citizens continue to arrive at the district headquarters along with their family members in the district of Bardia. All have similar pain and plight.
“They were told to leave the village else killed by the Maoist”, reports declare. “No one sleeps during the night, they fear the Maoists would come at night and kill them,” locals who have gathered in the District Headquarters told the media.
In Pokhara, Kaski, the YCL cadres in a broad day light mercilessly thrashed Transport Workers.
This is the Maoist version of Peoples’ Supremacy, perhaps. (Telegraph Nepal - 12 May 09)

Prospects
Nepal has not recovered from the civil war - the same conflicts are merely played out at a political level, yet constantly threaten to return to military conflict. The entrenched political elite - largely subservient to the Indian ruling class - are slow or disinterested in granting the basic social reforms the Maoists call for, and which have given them popular support; ie, land reforms, an end to indentured servitude, caste and ethnic oppression, desperate poverty, health and education access etc. Certainly a Maoist dictatorship would only be a newer more modern form of class rule - one where the duties and rights of a 'good communist citizen' may well include a denial of the right to strike, as already proposed by Maoist ministers in the interests of economic development (see;  http://libcom.org/news/nepal-maoists-restate-intention-ban-strikes-other-news-10042009). An attempt at a programme of social reforms would probably be a sensible measure by any new opposition coalition government. But the largely insensible shorted-sighted and fragmented Nepali ruling class - with a weak national economic base - is unlikely to have the historical perspective to act in their own long term interests and so pre-empt the Maoists in this way. Nepal seems set to slide into increasing fragmentation, as various ethnic and separatist demands are voiced in various regions. The strongest of these is on the southern plains, where the Madhesi movement (partly led by ex-Maoists, likely backed by Indian intelligence) is staking a political (and increasingly para-military) claim for regional autonomy, possibly as a first step towards full national independence. (Depending on who forms it, the Madhesi politicians may hold the balance of power in the next government, so are insisting on major concessions.)

At its most extreme, this fragmentation could lead to a country broken into two northern and southern proxy spheres of influence - a Chinese-dominated north next to an Indian-dominated south. It is not that the larger powers probably want this fragmentation and destabilisation on their doorstep; but if mini-statelets (or warlord territories) emerge across Nepal these will inevitably be drawn into competitive allegiances with their larger neighbours. Any prospects for the emergence of a strong independent working class movement tend to get disorientated among the confusion and brutality of political claims of rival contenders competing for the role of new ruling class.

Though with no overall majority, the Maoists hold 38% of the seats in the Constituent Assembly, twice as many as the nearest rival. The parties have struggled for months now over the writing of a new constitution; but this requires a two-thirds majority in favour. In 1994 Prachanda's Maoists abandoned their Parliamentary seats and took to the hills to prepare for their guerilla war. Despite their regular threats, the prospect of the Maoist majority now picking up the gun again seems unlikely. For the moment, they will probably continue with a rolling series of street protests (bandhs). Nepal waits to see what, if any, new government will be formed and whether the Maoists will return to it.

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Footnotes
1) Links to video of the speech (with English subtitles);
On fooling UNMIN over troop numbers;  http://www.youtube.com/watch?v=6EoQYZ2oa6M&eurl=http%3A%2F
On taking over army;  http://www.youtube.com/watch?v=m5_dkKoNaVc&feature=related
On using 'disbursement'/compensation cash to prepare for revolt;  http://www.youtube.com/watch?v=X-CVsdBuoHE&feature=related