After the Prime Minister Jhala Nath resigned from his post, the political parties focused on forming a national consensus government. Though both UCPN (M) and Nepali Congress claimed leadership of the future government, they were not able to get consensus from all the parties. During this period, there could be found neither a basis for national consensus nor progress could be made in the areas for peace and constitution-drafting process.

In the 5-point agreement between the UCPN (M), Nepali Congress, and UML, there was a provision of the prime minister resigning to pave the way for a national consensus government. However, Prime Minister Khanal resigned two-and-half months later on August 14. One of the reasons for the prime minister’ resignation was the lack of progress on the peace process, but another important factor was the suggestion from his own party’s central committee.

Khanal was perforce ready to resign as per his declaration to resign on August 13 if there was no progress on the peace process and the strong voices from within his own party to keep his commitment to save the party name. For the reasons behind his resignation, Prime Minister Khanal said, “Despite all attempts, there was no appreciable progress on the peace and constitution-drafting. Therefore, to form a national consensus government to complete the peace and constitution-drafting process, I have submitted this resignation as per article 38 clause 7(a) of the Interim Constitution of Nepal 2007”.

After the prime minister’s resignation, President Ram Baran Yadav asked the parties to form a consensus government within a week. While the UCPN (M) and Nepali Congress claimed the post of the prime minister, UML and United Democratic Madhesi Front started putting forward their conditions for their support. UML said that as long as there is no basis for completing the peace process, it would not accept UCPN (M) leadership, and Tarai-Madhes-based parties put the condition that their demands should be addressed.

The meeting of UCPN (M) officials on August 16 decided to nominate its vice-chairperson Baburam Bhattarai to lead the next government, if possible, on consensus basis or even under majoritarian government. In a meeting three weeks earlier, the UCPN (M) had decided that Bhattarai would lead the consensus government, which the officials meeting further clarified that Bhattarai would also lead a majoritarian government as well.
In the Nepali Congress, there was a dispute about who should be nominated to lead the next government after senior leader Sher Bahadur Deuba and parliamentary leader Ram Chandra Paudel both claimed candidature for the post of the prime minister. The central working committee meeting on August 17 decided to forward Deuba’s name for national consensus government, and an agreement was reached among the senior leaders that Paudel would lead be the candidate for any majoritarian government.

While the UCPN (M) claimed that government under its leadership was necessary to complete the peace process, Nepali Congress argued that while there was no basis for completing the peace process, it should lead the next government. Nepali Congress, UML, and Forum again raised doubts on the intention of the Maoists. They urged the UCPN (M) to take special lead on the peace process. They insisted that there should be agreement on the modality, number, rank harmonisation, standards and rehabilitation of the Maoist combatants. The UCPN (M) expressed its commitment and readiness to be flexible on the issues of the peace process but it did not clarify its position.

Though the Nepali Congress and UML and other parties asked the UCPN (M) to create a basis for trust, there was no clarification on this and no consensus was reached in the discussions. The talk of rotational government also came up as a way of seeking a consensus between the Nepali Congress and UCPN (M). Even there was agreement among the parties on rotational system of government, there was no disagreement between the Nepali Congress and UCPN (M) on who should lead the first government. After the both parties insisted on their leading the government first, consensus could not be had for rotational government also. In the meantime, the UML parliamentary department meeting also suggested rotational system for consensus government, but since the party itself did not take it forward effectively.

UCPN(M) and Nepali Congress held separate meetings with Forum and other small parties. Similar meeting also took place between UML and Forum. There was an agreement between Forum and UML to seek a common candidate for the post of the prime minister. However, it did not clarify as to whether Bhattarai or Deuba would be supported. Amidst the daily meetings without any consensus, the President Dr Ram Baran Yadav met with the Prime Minister Khanal to get information regarding the progress on the consensus on government formation.

During this period, the parties agreed on the need for a national consensus government to complete the peace process and promulgate the new constitution. However, the Nepali Congress and UCPN(M) could neither convince other parties of their positions nor retreat from their positions. Nepali Congress, UML, Forum, and small parties raised several questions of UCPN(M) regarding the peace process, and UCPN(M), getting wise to the growing calls, it said that it will be flexible on the issue of the peace process; however, it did not provide any basis for its commitment, and political confusion continued. As the talks were being held regarding the peace process, the work on constitution-drafting came to a complete halt.

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