PM Jhalanath Khanal (UML) 14 Aug resigned after 7 months in office under pressure from own party and opposition, following failure to reach agreement on integration and rehabilitation of over 19,000 former Maoist rebels. Maoist leader Baburam Bhattarai voted new PM with support of Madhesi parties; second and third largest parties, Nepali Congress and UML, in opposition. Term of Constituent Assembly extended until 30 Nov.

Opposition Nepali Congress (NC) 25 July blocked parliament to protest Maoist demands for cabinet reshuffle. NC claimed PM Khanal had reneged on May promise to resign; Khanal said will only resign when consensus govt formed. Maoists 30 July threatened to leave coalition govt if Khanal does not appoint 19 Maoist cabinet ministers, but later withdrew threat following meeting with Khanal.

Fresh doubts over Constituent Assembly’s ability to complete constitution by Aug after parties 20 June failed to meet deadline on plan for integrating former Maoist combatants into National Army. Negotiations stalled and sharp disagreements within Maoist party.

Potential political crisis averted in short-term after all parties 29 May agreed to extend Constituent Assembly by 3 months, originally due to expire 28 May. Deal included commitment to progress on “main parts” of peace process, release of draft constitution, resignation of PM Khanal by new 28 Aug deadline. Differences over interpretation began immediately, including on when PM Khanal should resign in favour of consensus govt. Largest opposition party Nepali Congress (NC) originally opposed extension, pushing for Maoist agreement on integration and rehabilitation of Maoist fighters, handover of their weapons. Negotiations on more detailed deal fell through due to last-minute demands by Madhesi parties and differences within NC. UNSG Ban praised deal, urged parties to complete peace process by new deadline. UN OHCHR 6 May condemned appointment of Maoist Agni Sapkota as minister of information and communications, suspected of kidnapping, murder during civil war; Sapkota denied charges.

Madhesi Janadhikar Forum-Nepal, largest party from Tarai plains, 31 March agreed to join new UML-led govt. UNSG Ban 29 Apr urged all parties to ensure completion of new constitution before 28 May deadline. Newly-appointed Energy Minister Gokarna Bista (UML party) survived assassination attempt 12 Apr in Kathmandu; motives, perpetrators unknown. Indian FM Krishna arrived in Kathmandu 20 Apr for 3-day visit.

Maoists 5 March agreed to join UML-led govt; power-sharing deal sees Maoists get 11 ministries, but only 4 sworn in by end of month. Supreme Court early month ruled Constituent Assembly’s (CA) May 2010 extension by 1 year constitutional, possibly opening for another CA extension if new constitution not completed by 28 May deadline. Following late-month visit by Chinese army chief General Chen Bingde, China 24 March committed $20mn in military aid to Nepal.

Step taken towards ending 7-month political deadlock as Constituent Assembly 3 Feb elected Jhalanath Khanal of UML party as new PM, but Khanal still unable to form new govt. Maoist leader Prachandra had earlier agreed to support UML, rescind own candidacy. Khanal 11 Feb named 3 UML ministers to new govt, but yet to form full cabinet as negotiations continue with Maoists over key portfolios.

Following UNMIN 15 Jan ending 4-year mission in Nepal, Maoist party 22 Jan formally agreed to place its 19,000 ex-combatants under control of cross-party committee headed by interim PM Madhav Nepal; UN praised as major step forward in peace process. No agreement yet on integration of combatants into state security forces. All parties agreed on new voting procedure to break 7-month political deadlock and elect new PM, making it mandatory for MPs to vote; Constituent Assembly scheduled first round of new PM elections for 3 Feb.

President Yadav called special parliamentary session for 23 Dec to break 6-month political deadlock in which Constituent Assembly has repeatedly failed to elect new PM, but session postponed. Supreme Court 18 Dec declared it illegal for MPs to abstain or remain neutral in PM vote. UNSG Ban 31 Dec expressed concern about political impasse and stalled peace process, urged all parties to resolve issue of reintegrating ex- Maoist combatants into National Army ahead of 15 Jan UNMIN departure; UNMIN currently monitoring integration process.

Political crisis continued as Constitutional Assembly again failed to elect new PM during month. Only remaining candidate Ram Chandra Poudel (Nepali Congress) fell short of required majority in face of continued boycott by Maoists and UML; constitution stipulates votes will continue indefinitely as long as there is a candidate standing. President Yadav 20 Nov passed budget, delayed since July, by decree to stave off financial crisis; all CA parties had early month agreed to pass budget, but Maoists 19 Nov reneged on deal, blocked Finance Minister Pandey from entering parliament. UNMIN 19 Nov objected to members of Maoist army (PLA) attending late month party conference, said PLA’s involvement in political gatherings could harm peace process.