Ok, first points first. The Royal Nepal Army cannot fight the Maoists; first, it lacks the capacity to fight, given that it has around 7-8000 militarymen, and Maoists have around 10-13000 cadre. Second, rebellions cannot be suppressed completely, hence the government and its henchmen are diplomatic enough not to keep any remains of a rebellion for another ethnic/social/economic uprising in future. Negotiation. Rational Choice theory says that if the cost of making a move (move A) is higher than the benefit, group X will not make a move or make another move (move B). In this case, if the Maoists see that they will be given space in the government, benefit is higher, so they will negotiate. Or, the Principled Negotiation Theory, if Baburam and his troops find that they cannot fight the war anymore, with losing local support and India imposing restrictions on arms import, then they will come for a negotiation. Neither is a pressing need right now. The government's side, same thing. If the government receives India and US' pressure to solve the problem (which it will take its time- since the US interfered with the decision to have the UN negotiate it), then it will 'swerve'. If the India/US finds Nepal as a strategic location to station its army in Nepal to keep an eye on China, they will make up a reason like they did in Iraq (weapons of mass destruction) and come all over the Maoists and wipe them off may be. Or for some economic and stability reasons, they might just pressure the monarch to end the conflict, then the Monarch will swerve. Then negotiation will happen. Unless the two parties, either the Maoists or the Monarch dont buzz, there will be no negotiation. The government is just a puppet, and since the past twelve years it has functioned under the direct supervision of the Monarch (although he had only constitutional rights, the supreme power of decision making still rests with him). And personally, I'm kinda tired of hearing analysis that repeat again and again that Maoism emerged out of social/economic dissatisfactions, ethnic discrimination, poverty and etc. No! Conflict has always been a part of Nepali politics; every regime change in Nepal has experienced a violent overthrow, even the Nepali Congress had attempted an armed revolution against the Ranas, in fact it carried it out in some parts of Nepal, with some support of King Tribhuwan. There has never been a nonviolent revolution in Nepal's history, except for the mass movement for Democracy. And no, Maoists didnt go underground for the poor and the underprivileged; they went underground when they were denied political space for the first election after democracy. It was in 1991. And the outcome of the first democratic government's efforts were starting to be seen only after 3/4 yrs of its rule (1995-96), so the Maoists cannot simply have gone underground out of dissatisfaction of the government to rule effectively. One thing is for sure, Baburam certainly wanted to end the deep rooted system of feudalism in Nepal. Power politics. Not much of a difference from how politics works in the international scenario. IF there is a possibility of power-sharing, negotiation is possible (for the Maoists), if there is possibility that it can give away the least and take the larger pie, there will be negotiation (for the Monarch).