PANAUTI (Nepal): They came just after dinnertime, hundreds of communist rebels in green fatigues, flowing in from every direction.

One group stormed down the brick lanes of Panauti’s old town — past Hindu temples crowned with pagodas, the Buddhist shrines, the well-appointed homes - to cut off the small army garrison. Others headed for the town’s municipal offices, easily picking off a single policeman guarding the rundown box of a building, and forcing the others to flee.

“They took over — they had total control,” said Ram Hari, a 20-year-old whose apartment overlooks the offices. “They stayed here for hours.”

It’s a story heard throughout the Himalayan kingdom as the Maoist rebels, after 10 years of rebellion and emboldened by the country’s deteriorating political situation, press their fight to create a communist Nepal.

Nepal’s King Gyanendra took power just over a year ago, saying he needed to oust an interim government to bring order to a chaotic and corrupt political scene and quell the rebellion, which has claimed 12,000 lives in a decade.

A year on, the rebellion has intensified, the economy has fallen apart and the rebels control a third of the country.

“The momentum is now on our side,” Suresh Ale Magar, a Maoist official, said from his prison cell in Katmandu.

That was clear in Panauti, where the insurgents killed a soldier and a policeman and bombed the municipal offices on Feb. 6, leaving bricks, glass and chunks of cement strewn around. At least the town’s residents were unharmed.

“That they can just come in here and plant bombs and then disappear — it means the king is in big trouble,” said Janak Thapa, another resident.

But as brazen as the attack was, few in Nepal believe the Maoists — who are estimated to have up to 12,000 lightly armed fighters — can win an outright military victory.

The rebels’ leader suggested as much in a rare interview with the British Broadcasting Corp to mark the group’s 10-year anniversary on Monday.

“That is why we believe that in today’s world it’s not possible only to move forward militarily,” he said. “Today’s reality is to move forward both politically and militarily, with a balance of the two.”

Diplomats and analysts say the rebels have skillfully exploited a split between Nepal’s king and the political parties he usurped.

“If the legitimate constitutional forces are split, that gives the Maoists a real big opening, and they’ve driven that wedge in,” said US Ambassador James Moriarity.

Asked if he thought they could help oust the king, Moriarity replied: “Absolutely.”

As anachronistic as a successful communist rebellion seems in the 21st century, the Maoists’ rhetoric of equality resonates deeply among Nepal’s 27 million people, many of whom still toil in feudal conditions on land owned by a wealthy elite.

Still, many here say the rebels’ power is rooted in fear. Vocal critics have been butchered by the insurgents, who often steal from poor villagers and press young men and women into service.

But “the Maoists are canny,” said Rhoderick Chalmers of the International Crisis Group, a Brussels-based think tank. “They are very patient. Even if their popular support is limited, they’re the only group with a coherent strategy.”

Last year, they teamed up with the major opposition parties, an alliance that scored its first victory when it undermined municipal elections.

Wednesday’s polls were billed by the king as a step toward democracy. The rebels and opposition called them an attempt by Gyanendra to legitimize his power grab. The parties peacefully boycotted; the Maoists stepped up attacks and threatened anyone who took part, killing two candidates.

The result: a turnout of around 20 per cent, and an ever-widening divide between the opposition and the king, who appears unwilling to back down and negotiate with either the rebels or dissidents.

The turnout “clearly shows that people do not have faith in the king’s promises,” said Dhruba Adhikary, an independent analyst. “The king won’t accept that.”

In Monday’s interview, Prachanda predicted the alliance would lead to the fall of the king, who he said could end up being executed or exiled.

“With the unity that has developed between the seven political parties, us and the civic society, and the way that the autocratic monarchy and the royal army have been cornered ... very shortly Nepal will become a republic,” he said.

Many in Nepal believe the king can’t hold on forever. Some talk of massive protests leading to an abdication, others speak of a military coup. The optimists talk of the king doing an about face and negotiating.

Magar said that whatever happens, the rebels are ready to negotiate with either the king or the political parties — both of which he casually refers to as “class enemies,” using the classic rhetoric of last century’s communist regimes.

“We will listen, we will be flexible — we recognize the need to engage our class enemies on the political level,” he said. “We won’t immediately resort to renewing our armed struggle.”

But he warned: “We are not flexible to the point that we are political and ideologically finished.”—AP