The election by Nepal's constituent assembly (the transitional legislature) of Jhala Nath Khanal as prime minister on February 3rd brought to an end a seven-month period during which political paralysis had caused government to grind virtually to a standstill. The election of a new prime minister, and the subsequent formation of a coalition government, was therefore a welcome development, but it does not at all preclude the possibility of further political strife. Numerous contentious political issues remain unresolved. In short, the Economist Intelligence Unit believes that the resolution of the most recent crisis is more likely to be a temporary reprieve than a harbinger of greater political stability in the months ahead.

Mr Khanal announced immediately after his election that he would form a "national consensus government", and he did succeed in securing the participation in the government of the largest party in parliament (with 238 seats), the Unified Communist Party of Nepal (Maoist), or UCPN (M). However, disagreements about the balance of power among the main political parties in the cabinet have prevented the appointment of a full cabinet. Moreover, relations between the UCPN (M) and Mr Khanal's Communist Party of Nepal (Unified Marxist-Leninist), or CPN (UML), are tense, and policy-related and ideological fault lines between the two parties remain entrenched.

It is just as likely that the UCPN (M)'s leader, Pushpa Kamal Dahal, decided to adopt a conciliatory approach because he believed this to be a way of returning the Maoists to power as it is that his gesture reflected a desire to improve Nepal's political stability. Indeed, the UCPN (M) leant its support to Mr Khanal's bid for the prime ministerial post only after the prime minister and Mr Dahal agreed explicitly that power in the cabinet would be shared. There is therefore no guarantee that the coming months will not see the Maoists revert to their previously intransigent ways, particularly if the composition of the government is not to their liking or if major disagreements about contentious policies persist. It is also possible that between their overt and covert influence, the Maoists will wield such power as to render the CPN (UML), which is the third-largest party in parliament, and the Nepali Congress (NC), the second-largest, in effect powerless.

Mr Khanal must also oversee the process of promulgating a permanent constitution before a May 28th deadline expires. The constituent assembly has already missed one deadline (of May 28th 2010) for agreeing a constitution to replace the temporary charter that has been in place since 2006. Co-operation between the country's main political parties-the UCPN (M), the CPN (UML), the NC and an alliance of ethnic-Madeshi parties from the southern Terai plains known as the United Democratic Madeshi Front (UDMF)-is essential if another constitutional crisis is to be averted. It seems unlikely, however, that the assembly will meet the upcoming deadline. Mr Khanal conceded as much when, speaking in early April, he said that the term of the assembly could be extended again. A ruling by the Supreme Court after the assembly missed the previous May 2010 deadline would provide a legal precedent of sorts for another extension to the assembly's term.

Meanwhile, the UDMF, which as a bloc holds 82 parliamentary seats, seeks the creation of an autonomous Madheshi state and the inclusion in the Nepali army of ethnic Madheshis. The NC, the CPN (UML) and the UCPN (M) have all refused to provide written commitments to the UDMF on the issue of Madheshi statehood. Moreover, there is little cohesion within the Madheshi political community (despite its nominal organisation under the UDMF banner), which is riven by differences over what autonomy should mean and how it should be achieved. For example, at least 30 underground militant groups operate in the southern Terai plains of the Madhesh region, the most extreme of which have issued threats against Madhesh leaders who co-operate in any way with a Nepali-speaking government. Nepal is therefore likely to face a period of continued instability characterised by disputes over constitutional and factional issues. Continued inter-party hostility could conceivably lead to political paralysis or, worse, the disruption or even the collapse of the peace process that has been ongoing since the end of the civil war in 2008.

Another source of potential political strife is the disagreement over the future of what remains of the People's Liberation Army (the Maoists' former rebel force). Re-integration of former rebel fighters into the national army has long been a UCPN (M) demand, but the Nepalese Army is opposed to admitting its previous foes. A new proposal that would create a separate force of former rebel fighters nominally under the command of the government would address the Nepalese Army's concern, but it would also serve to heighten suspicions that the former rebels could again take up arms against the government under the direction of their political leaders.