Maoists refuse to take power in Nepal

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The world's newest republic has been thrown into fresh political turmoil after Nepal's Maoists announced they would not form the country's next government.

In a response to their presidential candidate's defeat on Monday, the former rebels said they would sit as the opposition despite being the largest parliamentary party. The Maoists' leader, Prachanda, an ex-military chief who had been expected to become prime minister, said: "After our candidate was defeated in the presidential election we lost the moral grounds to lead the government."

The Maoists emerged as the largest party after elections in April. They did not hold an absolute majority but it was assumed they would lead a coalition government.

Although the parliament pushed ahead with a plan to declare Nepal a republic after almost 240 years of monarchy, it has failed to reach agreement on other issues. The Maoists' presidential hopeful was Ramraja Singh but he was beaten by Ram Baran Yadav, the ethnic Madhesi candidate of a recently-formed coalition of Nepal's second, third and fourth largest assembly parties, the Nepali Congress, Communist Party of Nepal (United Marxist-Leninist) and Madhesi People's Rights Forum.

The Maoists' decision will further delay the formation of Nepal's government at a time when the impoverished nation is suffering from soaring food and oil prices. Some of the optimism that existed in the aftermath of the abolition of the monarchy has been lost.

The election in April followed a decade of civil war, in which 13,000 people died as the Maoists fought government troops. A ceasefire was brokered in the spring of 2006 and the Maoists re-entered the mainstream. Their one unbending demand was that the country should declare itself a republic. The increasingly-unpopular King Gyanendra was ousted from the royal palace last month.

After his election as President, MrYadav, a former health minister, said he would try to unite Nepal. "The immediate need is to address the lack of a fair political culture," he said. "I want all Nepalese to join hands in harmony and move ahead in the development of the country."