Quotes of the Day

The last time peace negotiations broke down in Nepal, the fallout was gruesome. Massed ranks of Maoist guerrillas bent on overthrowing the government fell on isolated police and army outposts across the country with terrifying savagery. The army responded in kind, and the death toll rocketed to nearly 8,000 within months of the truce's end in late 2001.

It may be about to happen again. Last week, the guerrillas issued a set of demands so lofty—the Nepalese army must not stray further than five kilometers from their barracks, peace talks must be directly with King Gyanendra or conducted in his name—that an end to a six-month cease-fire seems almost inevitable. Ominously, the Maoist leaders went underground and closed their offices in Kathmandu, while the Royal Nepalese Army went on full alert, citing the Maoists' "possible intention to resume armed hostilities." The government rejected most of the rebels' demands but urged the Maoists to return to talks by Aug. 17.

If war erupts, the conflict might prove even bloodier than in 2002. Both the 58,000-strong army and the 20,000-strong Maoists have been rearming and retraining. One former Maoist commander, Ram Chaudhary, told TIME his old comrades are planning to shift the battlefield from the countryside to the cities—and in particular—to the capital. "They have moved a brigade to the outskirts of Kathmandu," he says. "They control the villages. Now the intention is to take over central power."

• Alex Perry | Delhi
• As peace talks grind to a halt, Nepal's government prepares for a showdown with Maoist forces