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Nepal's Economy Suffers as Political Crisis Deepens

As Nepal's political stalemate and communist insurgency drags on, the economy is feeling the impact - with shops bearing the brunt of government-imposed curfews and a general strike called by opposition parties. The crisis is also affecting the nation's tourist industry, as the number of trekkers and tourists eager to spend time in the Himalayan mountain kingdom dwindles.

The Everest Mart, in Kathmandu's tourist district, is open - one of the few shops in the area to defy a day-long curfew imposed by the government. But the managers are being very careful.

Every time a police or military patrol comes near, they pull down the grate over the shop's front door.

Manager Ravi Shresta says, that so far, the curfew has actually been pretty good for the business. All the other places are closed, he says, so the tourists come here. But, he adds, pretty soon the shop will run out of supplies, and then they will have nothing to sell.

Shresta mostly blames the government of King Gyanendra for the economic problems facing his shop and others here in Thamel, Kathmandu's tourist distict.

For the fifth day, King Gyanendra has imposed an all-day curfew on Kathmandu, forbidding shops to open and vehicles from traveling the streets. The curfews are intended to stop nearly three weeks of massive anti-government demonstrations, but the move has been largely unsuccessful.

On April 6, Nepal's seven main opposition parties called an indefinite nationwide general strike, as part of their campaign to pressure King Gyanendra to give up absolute power. The strike has kept most trucks and cars off the road, meaning fuel and food in the capital are in short supply. Many local markets are no longer opening.

The political stalemate began last February, when King Gyanendra dismissed parliament and restricted democratic freedoms. He says the move was justified, because the parties failed to bring stability to Nepal, which is facing a communist insurgency that has claimed more than 11,000 lives.

The king offered to form an interim government. But an alliance of seven main opposition parties rejected the offer. The parties are instead demanding the reinstatement of parliament. They have also pledged to carry on with anti-government demonstrations.

With no solution in sight, it is the vendors who are bearing the brunt of the political stalemate.

Nearby, Bhakti Shresta has kept open his music and DVD shop, mostly because he had no way to get home before the curfew hour and got stuck at the shop. He used to earn up to $40 a day. Recently his earnings have fallen to around $14 a day.

The music shop owner says he blames the political parties for the problems. He says Nepalese look up to the king, so the people talk to him about what their needs are and what they want.

Tourism is a key sector in Nepal's economy. The country has long been popular with trekkers and mountaineers - attracted to the tiny kingdom for expeditions in the Himalayas. But according to some reports, the number of tourists visiting Nepal annually has been falling.

It is not just the political stalemate in the capital that is to blame. For the past 10 years, communist insurgents who call themselves "Maoists," have taken control of parts of Nepal's countryside in their campaign to overthrow the monarchy.

The rebels have been known to stop trekkers and ask for small amounts of money - two or three dollars - as a so-called "tax" for letting them pass.

Now, the word on the street is that taxes have been raised. Sally Anne Zammit, a British backpacker, decided to cut her trip to Nepal short. First, with the curfew and strike, she found she has no way of getting out of the capital for the trek she planned in central Nepal. Then, after talking with a more experienced trekker, she decided she no longer considers it worth the risk.

"She just said the Annapurna Circuit is not a good idea, because, she says, the Maoists are stopping people and asking for quite big amounts of money. When we were in Goa, we heard it was kind of 200-300 rupees, and they would give you some kind of receipt to say that you paid them," she said. "But now they're asking for 2.5 or 3,000 per person ... It is just not a chance I want to take really."

With the rebels in the countryside - and both the king and the political parties refusing to back down in the cities - it may be some time before Nepal's reputation as a tourist destination is restored and the shop owners can start making money again.