KATHMANDU — When Maoist leader Pushpa Kamal Dahal stood for prime minister last August, his party pronounced it a "golden dawn" for Nepal after 10 years of civil war.
Nepal's unpopular monarchy had just been abolished, and the revolutionary leader's transformation from warlord to democratically elected premier was hailed as a fresh start for the Himalayan nation.
But less than a year later, the sun has set on the Maoist government and the prospects for peace and prosperity in Nepal look as distant as ever.
A coalition of rival parties took power following the fall of the Maoists in May over the issue of integrating their fighters into the army -- a key tenet of the 2006 peace agreement.
But without the support of the biggest party in the parliament, the new administration is struggling to tackle crippling fuel and food shortages, rampant corruption and growing fears over security.
The United Nations warned this month of an "alarming" rise in kidnappings for ransom in Nepal, saying the volatile political situation and absence of surveillance mechanisms were allowing criminals to act with impunity.
Daily life in many parts of the country has been heavily impacted by protest strikes, some of them violent, hampering efforts to rebuild a country still struggling to recover from the long civil war.
More than three years after the war ended, the head of the UN Office for the Coordination of Humanitarian Affairs in Nepal, Wendy Cue, said little had changed for many people.
"A lack of development was both the cause and the consequence of the conflict," she told AFP.
"Three years on, people are still waiting for the peace dividend."
A diarrhoea epidemic that has killed more than 100 people in recent weeks in a remote part of western Nepal due to a lack of clean water and basic medical facilities has highlighted the huge challenge the new government faces.
The first reports of the outbreak were in May, but emergency teams were not dispatched to the area until July, prompting accusations of government mismanagement.
Commentators say the political infighting that followed the fall of the Maoist-led government has focused attention on events in the capital at the expense of the isolated rural areas that suffered most during the war.
"What we have here is a crisis of governance -- a weak state that has no control over much of the country," said Aditya Adhikari, comment editor of the Kathmandu Post daily.
Adhikari pointed to a subsequent radicalisation of groups representing ethnic minorities outside Kathmandu that have long felt excluded from national politics.
"Groups in the Terai have already begun to form parallel systems of governance and semi-militant forces," he said, referring to the southern part of Nepal worst hit by ethnic unrest in recent years.
"The current government hasn't the legitimacy to address their concerns because it excludes the Maoists, and the ethnic groups are themselves sceptical of negotiations with this government," he added.
The Terai is important because it runs along the border with Nepal's main trading partner, India, and is home to 48 percent of the country's population as well as the bulk of its industry and food production.
The World Bank in its latest report on Nepal warned of a proliferation of armed groups in the Terai in the past two years and said the resulting violence had caused many government officials to retreat to district headquarters.
"There is a danger that tensions between diverse political and social groups in the Terai could deteriorate," it said in the report released last month.
"If that occurs, the damage to Nepal's main trading routes, investment and livelihoods could be far worse than during the 'People's War', which was largely concentrated in Nepal's hill regions."
The government has pledged to strengthen law and order, and the new budget this week provided more funding for the country's historically weak police force.
It also promised to alleviate poverty in a country where the average annual income is just 473 dollars and tackle double-digit inflation and an energy crisis that led to power outages of 16 hours a day in the capital this winter.
But many here believe little can be achieved without the involvement of the Maoists, who have already said they will oppose the new government's plans.
There are also increasing international concerns over the lack of progress in the peace process, launched when the war ended in 2006.
The mandate of the UN Mission in Nepal, charged with overseeing the peace process, expires on July 23 and is expected to be extended for a further six months at the request of the Nepalese government.
But there is little sign of any progress on the highly sensitive issue of integrating 19,000 Maoist fighters still confined to camps into the army.
"There was an expectation that the difficult part was going to be holding the election," said Sarah Levit-Shore, Nepal country director for the Carter Center NGO which provided international observers for the 2008 polls.
"Instead, the country has seen new challenges, and the need for parties to work together in good faith is critical."
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