October 18, 2006: Negotiations between the political parties and the Maoists have broken down, and Nepalese are fearful of an eventual Maoist takeover. The Maoists are demanding some control over parts of the government, and the removal of the king. While the political parties cannot muster much will to fight the Maoists, the Maoists continue to consolidate their power throughout the country. An informal tax system, based on extortion of "voluntary donations" from businesses, enables the Maoists to maintain an army of over 30,000 gunmen and full-time officials. In rural areas, these Maoist activists force government officials, especially school teachers, to either do what the Maoists want, or flee. The army and police no longer respond to local calls for help in arresting, or driving away, the Maoist gangs. Meanwhile, Maoist leaders say openly, to their followers, that these tactics will continue until a Maoist dictatorship has been established.

There is growing popular resistance to the Maoists, which is being met by force (kidnappings, beatings and other intimidation.) The Maoists expect some fighting, before they control the entire country. There are some areas where local tribal, or even government, officials are popular and well organized. But the Maoists believe that once they control the central government, or at least neutralize it, they can come down hard on local resistance.

Maoists are also exploiting anti-Indian attitudes among Nepalese, by harassing Indian tourists, businessmen and workers. Indians dominate a lot of the Nepalese economy, and Nepalese have always resented this.