The Maoists' election victory in April 2008 was a severe foreign policy setback for the US, which still officially considers the UCPN (M) a terrorist organisation. (The party is not on the US State Department's list of foreign terrorist organisations, but it is on the terrorist exclusion list, which designates terrorist groups for immigration purposes. The latter is a slightly more benign designation than the former, but it still indicates that the US government believes that the party commits and/or supports terrorist acts.)

More importantly, the victory was also a serious blow to India. The activities of militant Maoist separatists in India are among that country's primary security concerns, and the Indian government is wary of the Maoists' political legitimacy in Nepal. For this reason, it will be displeased by the likelihood that the UCPN (M) will once again play a prominent role in government after more than a year in opposition. Nevertheless, efforts to improve bilateral relations are ongoing.

China, meanwhile, has been supportive of the UCPN (M), both because of its own Maoist credentials and owing to the fact that Nepal acts as a tiny yet strategically important arena for Indo-Chinese rivalry. In recent months China too has taken steps to bolster bilateral ties with Nepal, and is likely to continue to do so, much to the consternation of India.