The insurgency is largely local with very little support from Naxalite groups in India or Maoist groups in China. In fact, the CPN-Maoists have chided the Chinese of resorting to capitalism. However, there are claims of links with the Maoist and Naxalite groups in India and LTTE in Sri Lanka. The People’s War seems to have found a strong support base within the people of rural Nepal especially in the midwestern and western districts. Analysts claim that high levels of corruption and bureaucratic high handedness and political instability has led to the Maoists groups finding sanctuary and support amongst the people. That the Maoist insurgency has survived five-year period and continues to enter into news phases is in itself a clear indication that the movement is no longer a temporary phenomenon without social bases.

In the past the communist movement in Nepal was defined by an upper caste axis (Brahmin, Chettri, Newar) of non-ruling communities against the ruling powers. This current movement has participation of the lower castes and untouchables as well giving it a much broader base. In addition women participation has swelled the ranks of the guerillas with one estimate pointing to 30% guerillas being women.

The guerilla form of warfare has resulted in heavy civilian casualties. Civilians suspected to be informers are killed by both sides. The police do not always distinguish between civilians and guerillas in civilian areas during its ‘search and kill’ operations. In addition, the insurgency itself has funded itself through extortions of local businessmen and contractors as well as through ‘taxes’ from school teachers, farmers, and artisans. This has caused significant distress to the rural communities as well though the Maoist groups claim that these contributions are often voluntary.

In an analysis, Chitra Tiwari, an independent consultant on international affairs based in DC, points out: “Fighting a guerrilla war is an expensive proposition for any state. Guerrillas operate in the midst of, and often hidden or protected by, civilian populations. The purpose of guerrilla war is not to engage an enemy army in direct confrontation, but rather to harass and punish it so as to gradually limit its operation and effectively liberate territory from its control. Efforts to combat such a guerrilla army- counterinsurgency- often include programs to "win the hearts and minds" of rural populations so that they stop sheltering the guerrillas.

Nepali strategic planners have failed to find a way in which people would stop giving sanctuaries to guerrillas. This could have been done by means of massive economic development package to people in the early period of insurgency. The relief package that the government has allocated after so much of killings has become irrelevant. Counter-insurgency measures require civil-military coordination in which clean civil administrators are expected to disburse economic development package. Here lies the problem. Nepal’s problem is not the Maoist war but an entrenched coalition of corrupt politicians and bureaucrats that profits from Maoist war. It is very much likely that the economic relief package announced to combat insurgency could be yet another opportunity to corrupt civilian as well as military authorities for embezzlement. Counter-insurgency measure, if applied and executed by clean hands, will help minimize the distribution crisis, which in turn, will help to neutralize popular support to guerrillas.”

In the recent months, the Nepalese government has been attempting to increase the size of the army and upgrade its weapons with $20 million aid from USA. The personnel in the armed forces will be gradually increased from 15000 to 20000. In addition, the Royal Nepalese Army has setup up Battalions in 25 of the troubled districts to counter insurgency.

The insurgents have not been able to project a picture of stability either. For one, the extensive violence used by the insurgents has alienated not only foreign observers but sections of local communities as well. To their credit, they have tried and been partially successful in establishing local self-government in regions that they control. These local governments have included judicial, administrative and distributive functions. However, the local communities often describe these local governments as authoritarian. Further, squabbling within the leadership of the movement, accusations against various leaders from within the movement and splitting of groups has not helped their case. Analysts question the ability of an insurgence based on violence in bringing peace to this region.

Dialogue between insurgents and government forces have failed. The Maoists consider the Nationalist Congress (NC) and the Rashtra Prachatantra Party (RPP) to be parties of feudalistic and fascist forces and identify them their main enemies. They maintain an equidistant relation with other political parties such as CPN (United Marxist Leninist) and CPN (Marsixt-Leninist).

When ideas for talks were first discussed in 1997, the insurgents had put up several preconditions: the 72 Maoist killed by the police be declared martyrs, inquiry into their killings and withdrawal of all cases, release of all those in various jails, withdrawal of the police from all regions sensitive to counter insurgency. In January 1999, a committee to engage in talks with the Maoists was formed by the government under the leadership of Mr. Sher Bahadur Deuba. The Maoists refused to participate. In March 2000, CPN-Maoist agreed to engage in talks along with a 40-point condition with any party except the NC.
King Birendra death has also affected the dialogue process. He was respect by a number of the insurgent groups despite being part of a monarchic system and the insurgents have proclaimed his death as a conspiracy. The ongoing political instability in the government has not helped either. The election commission of Nepal has passed a ruling that does not recognize Prime Minister Deuba as the head of the largest party and instead hands over power to the Nepali Congress lead by Koirala. In a more recent move, King Gyanendra has sacked the Deuba government and has taken over.

With political instability having become a constant fixture in the Nepali government, any dialogue has become difficult. In the absence of any initiative by the current political powers to sincerely address serious issues of inequality and a growing Maoist movement that does not seem to present credible long term answers, peace in this mountain nation seems a distant possibility.