- guardian.co.uk, Monday June 4 2001 09.01 BST
From secret camps in the hills around Kathmandu Maoist insurgents have launched devastating attacks on police posts, often killing up to 30 at a time.
More than 1,670 people have died since the campaign began in 1996, after the party dropped out of the parliamentary democratic system. In response, the government has faltered, unwilling until recently to deploy troops on the ground.
The Maoists have seen their cause spread quickly through the country's desperately poor valleys. Although millions of aid dollars have poured into Nepal, little has filtered through to the subsistence farmers who make up the vast majority of the 23m population and the surge in tourism in the past decade has made little difference to the lives of the majority.
The Maoists and their leader Comrade Prachanda model themselves on Peru's Shining Path, the Sendero Luminoso, and promise a peasant takeover in the countryside and eventual victory over the cities.
In the west of the country they have established people's banks and courts but brutally eliminated local intellectuals and supporters of the ruling Nepali Congress party.
Prince Gyanendra will find containing the Maoist revolt a priority. "Gyanendra is mature and shrewd. He will try to adjust to the situation," said Lok Raj Baral, professor of political science at Kathmandu's Tribhuvan University.
One of the central planks of the Maoists cause is to break Nepal's close ties with India and India is anxious about the current situation. Kalim Bahadur, a South Asia expert at Jawaharlal Nehru University, said: "The next few days are critical. The monarchy is the one central pillar in Nepal and the sooner the crisis is overcome, the better for the nation and for India."
Poor among the peaks
Population 23 million
Religion about 90% Hindu (official), 5% Buddhist
Illiteracy rate 62.2%
Economy One of the world's poorest nations with over 40% of the population estimated to live below the poverty line. Over 80% of the population are dependent on agriculture. Tourism is the single largest commercial earner of foreign exchange. Foreign aid remains vital to sustaining the economy
Political system Parliamentary democracy with constitutional monarchy. Democratic politics was introduced in 1991 after popular protests - but it remains extremely factionalised with frequent changes of government
Geography Home to eight of the world's 14 highest peaks, including the highest, Everest
History In 1816 Nepal became a quasi-British protectorate after the Anglo-Nepali war, and in 1923 Britain formally recognised Nepal's independence - though foreign relations remained under British control
Gurkhas Since 1885, Gurkhas have served in the British army, winning 26 Victoria Crosses, more than any other single group
