If Gyanendra is smart, he'll leave the country.
Neither China nor India are remotely happy about what is going on in Nepal. Because of its strategic position as a buffer state between the two giants, a peaceful, neutral, Nepal would best suit the interests of both sides. Instead, they've got a bunch of Maoist rebels running the government and Maoists aren't known for moderate policies. This was really India's game to lose as the monarchy was always friendly to India, yet throughout the revolution, India did nothing to stem it. The result is that India is left without an ally and both India and China now have a huge question mark on their borders.
What will happen if Nepal goes the way of Cambodia under the Khmer Rouge? What if the new government fails to create a viable state? Any destabilizing situation that causes Nepal to lean too heavily toward one of the two nations on her borders could cause one of the giants to invade, and that would escalate tensions. The more conservative members of India's government see shades of Tibet in their peripheral vision and worry about a possible Chinese, "liberation," of Nepal.
This has been a debacle on all sides. The UN, China, India, and the west have done nothing to assure a viable Nepali state. Maoism hasn't proved itself a tenable form of government for any length of time, and any move by India or China to stabilize the country would be construed as threatening by the other. This is a bad situation and history has shown it usually gets much worse.
I'm immensely displeased that the US has ignored the Nepali situation for so long because it's in our interests to have a neutral, weak, Nepal if only not to inflame tensions between India and China.
