Thamel tourist district of Kathmandu on Nepal New Years Day

Nepal is hoping political stability will mean a permanent recovery for the country's third-largest source of money, tourism. A rising number of visitors has merchants cautiously optimistic, but they are keeping a nervous eye on the former communist rebels now occupying several government ministries. VOA's Steve Herman reports from Kathmandu.

Nepal is hoping it is on a roll.

The roulette wheel is turning hopefully at the Casino Royale, on the grounds of Kathmandu's Yak and Yeti hotel.

In recent months, resort operators have noticed an increased stream of tourists into the Himalayan kingdom.

A decade-long Maoist insurgency had chased away Nepal's traditional visitors, including once-ubiquitous trekkers, backpackers and religious pilgrims.

This month, however, the Maoists joined the government, an interim step designed to lead to Nepal's first elections since 1999. Along with peace has come tourists, in numbers not seen for years.

Rajeev Bhatta, Casino Royale's operations director, is betting the political calm will lure more gamblers to his green felt tables.

"Hopefully, with a stable government coming in the next few weeks, we believe that casinos along with others in the tourism industry will do better," he said.

Waitress at buffet at Casino Royale

Nepal borders the world's two most populous nations, India and China, but Bhatta says his industry has barely made a dent in reaching its potential numbers.

"It's rather unfortunate that being sandwiched between two giants, India and China - India we have been able to market ourselves," he added. "But sadly, the Chinese, we don't have a lot of them. They prefer Macau or Las Vegas."

Kathmandu has seven casinos, and enough hotel rooms to accommodate more than a million visitors per year. But the number of tourists nationwide dropped by half between 1999 and 2002, falling to about 250,000.

But visitors in recent months are up by more than 30 percent compared to the same period last year. Casino and hotel operators say things are nearly back to the 1999 level.

Arjun Shrestha, sales manager of Lucky Thangka

On the narrow streets of Kathmandu's Thamel tourist district, foreign faces are streaming back into the area's inexpensive guest houses, pubs, internet cafes, and Arjun Shrestha's shop, the Lucky Thangka, which is stocked floor to ceiling with Buddhist banners.

"Before, there was no business, very few customers only - very, very few tourists. Now is, you can look outside, it's a lot, many tourists," he said.

Shrestha and others are praying that the change in fortune will last. But the Maoists have hinted that they are ready to resume their insurgency if their political demands are not met. And even if peace is maintained, the communist presence in government has business people expressing apprehension along with hope.

The apprehension stems from the Maoist's traditional hostility towards capitalism.

Nepal Maoist commander Anaula

Barsha Man Pun, a Maoist central committee member who goes by the name of Commander Ananta, says the communists are accepting of what he calls suitable investments for Nepal.

Ananta, in a VOA interview, says a Maoist government would encourage Nepalese businesses to generate profits, as long as they work harmoniously with the local people.

The Maoists waged their insurgency from the countryside to change Nepal from a monarchy to a republic. In the end, actions by members of the royal family, including a power grab by King Gyanendra in 2005, led to popular support for ousting the traditional monarchy.

Nepalese hotel operator Yogendra Sakya

Yogendra Sakya, executive director of the six hotels in the Ace resort group, does not rule out future cooperation between business and the Maoists.

"Business will always be pro-government because they want a strong government," he said. "So it was the king that was ruling and then they worked with the king, no doubt about it. Now, tomorrow, if the Maoists come and they have a good economic agenda, they'll have to work with the Maoists."

Sakya expresses hope that the Maoists will moderate their totalitarian ideology now that they have a taste of power from inside government.

"Giving a blood boiling speech in the streets and actually staying in the hot seat of managing the country is two different things," he continued. "Blood boiling speeches don't cook their food at home."

Prosperity has come and gone in Nepal over the centuries. The next chapter will see whether the country, currently one of the world's poorest, can again reach Himalayan heights of success.