AGITATION-NEPAL TWO LAST KATHMANDU

LOOSE ALLIANCE Last November's unprecedented alliance between Maoist rebels and the country's seven main political parties has left King Gyanendra looking even more isolated, analysts say. Under the deal, struck after months of secret negotiations, the Maoists have promised to eventually rejoin the political mainstream.

Parties and rebels promised to work together to end what they call ''the autocratic monarchy'', without explaining how they would do so. But the two sides continue to have divergent visions on the political system they would like to see replace royal rule.

The rebels have a strong presence in the countryside where they run their own administrations. They enjoy some support among the rural poor, but also enforce their rule through fear and intimidation.

The revolt, which has claimed 13,000 lives since 1996, has scared away tourists as well as investors from the cash-strapped nation and undermined its aid dependent economy.

The Manila-based Asian Development Bank, a key aid donor, says economic growth slowed to 2.0 percent in the year ending July 2005, from 3.5 in the previous year and 4.8 in 2001.

King Gyanendra says he took over only after the parties failed to quell the revolt, and has refused to budge.

In February, he held municipal elections which were boycotted by the parties and opposed by the Maoists, and turnout was low. He has also laid out ''a roadmap for democracy'' under which national elections are expected to be held by April 2007.

But a recent opinion poll conducted by Himal, a popular magazine, showed 65 per cent of those surveyed did not approve of the king's direct rule. Many Nepalis are tired of the stalemate and want the king, the political parties and the Maoists to end their fighting and join together for peace.

''I don't think it can be resolved otherwise. The crisis is spreading like cancer,'' said 33-year-old taxi driver, Manjil Maharjan. ''I want nothing else but peace so that I can work and make a living without any trouble.'' REUTERS CH HT1450