Nepal steps back from the abyss as Maoists agree to peace talks

After a seven-year uprising which cost thousands of lives and saw the government lose control of much of the kingdom, the war-weary residents of Nepal were daring to hope anew last night after the declaration of a ceasefire.

Maoist insurgents and the puppet government appointed by King Gyanendra – who assumed the throne after Crown Prince Dipendra killed most of the royal family in June 2001 – said they had agreed to talks. "The peace process will begin immediately," said a government minister. The announcement came four days after the chief of the country's armed police was shot dead with his wife and bodyguard as they strolled through Kathmandu.

It also followed days of secret negotiations in which Britain played a role.

The ceasefire announcement is an important development, but fears abound that it is merely a tactical move by the Maoists to allow them to re-equip and consolidate their forces. The last ceasefire, in mid-2001, fell apart after negotiations.

The declaration also coincides with nagging international concerns that the conflict will ultimately destabilise an already combustible part of Asia.

There has been nothing to suggest the conflict can be resolved through military force. Nepalese intelligence services have proved unable to penetrate the Maoist ranks. And there is little chance the kingdom's army – more used to acting as international peacekeepers than fighters – will subdue the guerrillas, who number at least 10,000 men and women operating in mountain-ous terrain well beyond the government's reach.

Rampant corruption among the Kathmandu elite, atrocities committed by the security forces and creeping popular disillusionment with the monarchy and the country's political parties have strengthened the Maoists' hand.

They have built support among the elements that get the roughest deal from the caste-ridden Nepalese society – untouchables, women and the rural poor. One popular social measure they introduced was an alcohol ban, which came as a welcome relief for women regularly beaten by their drunken husbands.

Observers of the conflict, which the government says claimed more than 4,000 lives last year, believe some of this support has been dented by the guerrillas' violent tactics, which have included murdering informers, commandeer-ing homes and kidnapping children for ideological indoctrination.

This behaviour has been counter-balanced by the behaviour of the army, which has allegedly raped and killed countless civilians.

Yet the Maoists have their strategic weaknesses, not least of which is the apparent lack of any outside source of funds. Anxious to avoid rebels and security forces, many thousands of men have fled to cities or into India, depleting the potential recruitment pool.

The international community and Nepal's neighbours have been worried the conflict could eventually unsettle the entire region. India is fretting the Maoists successes will give heart to its leftist armed insurgents. China is watching nervously for any sign that the uprising might affect Tibet.

If the Maoists were one day to throw out the monarchy and Kathmandu's ruling elite, the consequences could be serious. "If we have a Pol Pot scenario, this would be extremely destabilising for the region," said one Western source. "India would probably come in and that would upset the Chinese and Pakistan and who knows what would happen."

Such views are considered by many as alarmist. But nerves have been fraying. One senior Western source said: "Let's just hope that the ceasefire sticks. If it doesn't, this conflict will become even greater and could drag on for decades."