The decision on Wednesday to abolish the Nepalese monarchy has been greeted with a great deal of fanfare, both in Nepal and internationally. Among ordinary Nepalese, there are many hopes that the establishment of a republic will usher in peace and prosperity. In reality, it is a desperate attempt by sections of the Nepalese ruling elite to salvage the discredited state apparatus in preparation for pro-market reforms and a fresh onslaught on the living standards and rights of workers and the urban and rural poor.

The resolution for a “federal democratic republic” was the first action of the newly established Constitutional Assembly and was carried overwhelmingly—560 to just 4. King Gyanendra and his family have been given 15 days to vacate the Narayanhity Palace in Kathmandu and will be reduced to the status of ordinary citizens. A president will be chosen and installed as head of state at the next meeting of the assembly, which has two years to draft a new constitution.

All the major political parties—the Communist Party of Nepal-Maoist (CPN-M), Nepali Congress (NC) and Nepal Communist Party-Unified Marxist Leninist (NCP-UML)—hailed the decision as a great step forward. Prime Minister and NC leader G.P. Koirala declared that “the dream of the Nepali people has come true,” even though his party had until recently been pushing for a constitutional monarchy and the retention of the king as ceremonial head of state.

Maoist spokesman Krishna Bahadur Mahara told the media: “The Nepalese people have been freed from centuries of feudal tradition and the doors have now opened for a radical social and economic transformation.” The Maoists won the largest bloc of seats—220—in assembly elections in April and have been asked to form the interim government that will govern for the next two years. The two largest establishment parties—Nepali Congress and the NCP-UML—won 110 and 103 seats respectively.

Tens of thousands of people thronged into the capital Kathmandu to celebrate the declaration of the republic. Hundreds of protestors demanding that King Gyanendra leave the palace immediately clashed with police yesterday. The Nepali press joined in the general euphoria with headlines in the Kathmandu Post of “Vive la Republique” and in the Himalayan Times of “A hope is born”.

The expectations and hopes of masses of ordinary people will rapidly come into conflict with the program of a new Maoist-led government. The Maoists, who ended their protracted guerrilla struggle in 2006, have been busy pledging to business leaders that they will defend private property and encourage foreign investment. The CPN-M’s program is based on the reactionary two-stage theory of Stalinism, which in the name of clearing away feudal remnants defends capitalism and relegates socialism to the indefinite future.

In an interview with IBN/CNN, CPN-M chairman Prachanda declared: “Our fight is against feudalism, not against capitalism... Between the feudal stage and socialist stage there will be a capitalist stage.” He went on to clarify what that meant in practice, promising his party would “try to create favourable environment for them [foreign investors] to invest here”.

The CPN-M leader explained that a government led by his party would study the Indian and Chinese models of Special Economic Zones to learn how investors should be helped. In order to protect investors, Prachanda has promised to set up an “industrial security force” that would include former Maoist guerillas in order to protect private industrial enterprises.

In fact, in the name of “ending feudalism,” the CPN-M is coming to the rescue of Nepali capitalism, which traditionally relied on the monarchy and the army to suppress discontent and opposition generated by the country’s appalling levels of poverty and unemployment. In April 2006, tens of thousands of protesters defied security forces for days to demand that the king step down and that basic democratic rights be implemented. It was in the aftermath of these demonstrations that the Maoists reached a deal with a seven-party alliance headed by Nepali Congress and the NCP-UML to enter the interim government in preparation for the election of a constituent assembly.

A sordid history

Media coverage of the end of the Nepali monarchy has focussed almost exclusively on widespread popular hostility to King Gyanendra who was enthroned in 2001 after a bizarre and still unexplained massacre of much of the royal family, including former King Birendra. Crown Prince Dipendra, reportedly enraged by his parents’ refusal to allow him to marry, opened fire at a family gathering with automatic weapons, before shooting himself.

From the start, King Gyanendra and his son Paras were under a pall of public suspicion for engineering the incident. He quickly tore up his promises to end the war with the Maoists and modernise the country. In 2003 October, Gyanendra dissolved the parliament, appointed a figurehead prime minister and stepped up the war to crush the Maoist guerrillas. In 2005, he dismissed the prime minister and assumed full executive powers, declaring an emergency and granting sweeping powers to the military. Leading opposition politicians were rounded up, heavy media censorship imposed and protests ruthlessly crushed.

However, as the 2001 bloodbath revealed, the whole institution of the monarchy was in crisis. The shut-in world of the royal family was completely divorced from the reality of the vast majority of the population. Yet the same international media that today heralds the end of the monarchy routinely used phrases such as “beloved monarch widely revered as an incarnation of a Hindu god Vishnu” to describe Birendra in particular.

In reality, the history of the Nepali monarchy is comparatively brief—some 240 years. Its origins go back to the eighteenth century, when the Shah clan was driven out of India and retreated to the mountainous areas of Nepal. With the assistance of the British East India Company, the Shah ruler consolidated its rule over the bulk of present-day Nepal. In 1857, the Nepali regime provided badly needed soldiers to assist the British to suppress the widespread mutiny of Indian soldiers.

The whole record is sordid. In 1846, protracted and bitter factional infighting culminated in a bloody brawl one night that resulted in the death of dozens of Nepali aristocrats. The chief beneficiary of what became known as the Kot massacre was prime minister Jang Bahadur who drove his rivals into exile, and established what amounted to a hereditary prime ministership, with the monarchy under virtual house arrest. The rule of the Ranas only ended in 1951, when with the assistance of Nepali Congress and Indian government, King Tribhuvan Bir Bikram Shah was installed on the revived throne.

For more than half a century, King Tribhuvan, followed by his son Mahendra in 1955 and his grandson Bihendra in 1972, presided over one of the world’s last remaining absolute monarchies. Despite the illusions fostered by Nepali Congress, King Mahendra repeatedly stalled on the granting of a constitution. When it was finally proclaimed in 1959, the constitution was a farce. The king retained sweeping powers, including the right to impose a state of emergency, which he did without warning in 1960 and ordered the arrest of political leaders. His son Bihendra only granted a limited “democratic” constitution in 1990 after mass protests in 1989 threatened to spiral out of control despite a ruthless crackdown that resulted in the deaths of more than 500 people.

Increasingly the Nepali monarchy was an anachronism that frustrated efforts by sections of the business elite to integrate the economically backward country into globalised processes of production. Efforts by the traditional parties—Nepali Congress and its various Stalinist allies—invariably floundered on the vested interests of the royalist cliques and the army hierarchy. With their promises to “fight feudalism” and enact “a radical social and economic transformation” to create a favourable environment for foreign investors, the Maoists are offering a way out of the impasse for the local capitalist class.

The imposition of far-reaching market reforms will provoke political opposition as social conditions for the majority deteriorate even further. Nepal is one of the world’s poorest countries with an average per capita income of just $US280 a year. Over 30 percent of the population of nearly 30 million lives below the official poverty line and in rural areas in particular basic services such as clean water, sanitation, schools and medical services are very limited or non-existent. For all the talk about democracy, the next government will inevitably require anti-democratic methods to impose its policies.

The political situation is highly unstable. The CPN-M has been called on to form the next government but requires the support of other parties to establish a majority in the assembly. A coalition is yet to be formed and the leading ministerial posts are undecided. At the same time, while King Gyanendra has indicated that he will leave the palace, the royalists and the army top brass undoubtedly harbour ambitions to make a comeback. The army has refused demands by the CPN-M to integrate its fighters. Several small bombs that exploded in Kathmandu on Tuesday and Wednesday were widely believed to be the work of royalist groups.

The instability is further compounded by the intrigues of Nepal’s neighbours and the major powers, all of which are scrambling for influence in Kathmandu. India has traditionally regarded Nepal as part of its sphere of influence and is concerned about a possible growth in Chinese influence. Both countries have welcomed the declaration of a republic. India is sending a delegation to Kathmandu next month to discuss a “comprehensive economic partnership.” China has offered to develop a railway link with Nepal.

The US may well play the most destabilising role. The Bush administration backed the monarchy during the April 2006 protests until the last minute and opposed the integration of the Maoists into the interim government. Washington has refused to take the CPN-M off its list of terrorist organisations despite efforts by the Maoist leaders to reassure the US that its interests will be protected.

Last week, Deputy Assistant Secretary of State Evan Feigenbaum visited Kathmandu to assess the situation and held talks with Prime Minister Koirala as well as Maoist leader Prachanda. Feigenbaum warned in Washington yesterday that the degree to which the US would work with the Maoists depended on how well they stayed away from violence. The real threat of provocation and violence, however, comes from the former monarchy, the army and royalist supporters. Washington is quite capable of encouraging such activities if it finds that its rivals—notably Russia and China—are gaining the upper hand in Kathmandu.