the state owned or state-controlled banks to recklessly lend to them at the cost of the depositors, taxpayers and the poor." The inability of the political leadership to protect the weak against the strong and the heavy reliance on non­political forces, i.e. the army, police and bureaucracy, to maintain political order further created an anti-democratic spiral and conflict escalation. Distributional Conflicts There is an uneven exercise of sovereign power by age, gender, caste, ethnicity and regions affecting the lower side of the scale, despite the promise of freedom, equality, democracy, human rights and sovereignty by the Constitu­tion. The associational, mobilizational and agitational strategies of women, trade unions, human rights activists, ethnic groups, Dalits, janajatis(indigenous people), etc for identity, opportunities and power have helped to germinate grievances and conflict aggravating collective action problem. These tendencies have affected the"integrative" and"adaptive" capacity of the political system and also fuelled conflicts of the suppressed and manifest nature. Ways out of the Conflict Conflicts become inevitable when public order is imposed against great inequalities and deprivation. Just as the sources of conflicts in Nepal are greatly diverse, so too are the means of resolving them. The solution to structural conflicts(between the government and the Maoists) requires a structural transformation of the political sphere. The solution to manifest conflicts(between the government and all the opposition parties) requires fairness in the power sharing mechanism and establishing good governance. And, the solution to suppressed conflicts(between the govern­ment and societal forces) requires liberation, entitlements and social opportunities for the people as promised by the Constitution. One can analyze the options that have widely been discussed in the country. First, the Maoists' goal of establishing communism is geo­politically untenable and politically unfeasible at the moment. Second, the physical liquidation of Maoists has proved to be a false choice so far. The security operations have neither fully controlled the Maoists nor even fully isolated them from the people. Political stability can be achieved only if governance is capable of addressing the structural causes of the Maoist problem through ample economic opportuni­ties and political structures that ensure equitable represen­tation of people of diverse origins. The establishment has only proved that Maoists cannot win. Any possibility of involving foreign armies in the solution of these structural conflicts might help the Maoist to convert a class war into a war of national liberation. Third, finding a middle ground is the only feasible option. The government should agree to fulfill the legitimate demands of the Maoists related to the public interest. It helps to enlist their cooperation for shared interests. Rule of law should be the basis for regulating social interactions at all levels and decentralization of poverty alleviation programs, employment opportunities and skill-oriented educational programs are required in the most backward areas to ameliorate the conditions of unemployed youths, Dalits, indigenous people, and the poor. There is also a need to promote easy access and transparency in the judicial process, corruption free political and administrative services, carry out reforms in the election process to ensure its fairness, and the democratization of internal activities of the parties. Dialogue with the Maoist political leadership helps to weaken its hard-liners who may be trying to continue guerrilla activities. After arms are laid down, democracy should be allowed to function according to the Constitutional norms. The establishment has to build an atmosphere of trust among the political parties and mobilize civil societies and friendly countries to get their active support. Finding this middle ground is no easy task. An inter­national facilitator from a neutral country might help to identify common interests and facilitate the process of negotiations. Ansprechpartnerinnen: Dr. Beate Bartoldus, Tel. 0228-883-515, E-Mail: Beate.Bartoldus@fes.de(verantwortlich) Katharina Bielz, Tel: 0228-883-506, E-Mail: Katharina.Bielz@fes.de Friedrich-Ebert-Stiftung Internationale Entwicklungszusammenarbeit, Referat Asien und Pazifik Godesberger Allee 149, 53170 Bonn Fax: 0228-883-575 Sie finden den Kurzbericht zum Herunterladen sowie Informationen zur Arbeit der FES in Asien auf http://www.fes.de/asien. - 5-