Nepal's Maoists heading to victory in election

KATHMANDU (Reuters) - Nepal's Maoists were heading for victory in the Himalayan nation's first election in nine years, latest tallies showed on Sunday.

The Maoists, who ended an insurgency two years ago and entered electoral politics, won 61 of 108 seats declared so far and were also leading by a similar proportion in constituencies where counting was continuing, election officials said.

The outcome of Thursday's election, the centerpiece of the peace deal, has surprised many analysts who had predicted the former rebels would emerge as the third largest party.

"It has come as a bang," said Lok Raj Baral of Nepal Centre for Strategic Studies, a private think-tank. "It is possible that they will win a majority."

Baral said the results were a mandate for a change from the ineffective old political order. The 601-member assembly Nepal was voting for is meant to write a new constitution, formally end a 240-year-old monarchy, and make laws.

The Maoists, once considered close to Peru's Shining Path guerrillas, have abandoned the language of Marx and Mao. They have not called for nationalization and say foreign investment is welcome in some sectors of the impoverished nation's economy.

They also favor land reform and social efforts to eradicate poverty.

Two other parties -- the Communist UML and the Nepali Congress earlier thought to be favorites -- have so far won only 16 seats each. The UML conceded defeat and Madhav Kumar Nepal resigned as party secretary-general.

The Maoists were also doing better than expected in the country's southern plains, home to nearly half of the population, an area where they were thought to be weak.

Three ethnic Madheshi parties, who organized a crippling strike this year demanding autonomy for the southern plains called the Terai, have jointly won 12 seats so far. Smaller parties bagged the rest.

INDIAN AND U.S. CONCERNS

Other commentators said even if the Maoists were not able to clinch a majority they were clearly heading towards becoming the single largest party. They controlled 84 seats in the 329-member interim parliament after they abandoned the insurgency.

"Maoists poised for landslide win," declared a headline in the Himalayan Times daily.

Complete results are expected around April 20 at the earliest as counting is slow and the election was a complex mixture of direct and proportional systems.

While 240 seats will be filled on a first-past-the-post basis, another 335 will be decided by proportional representation and 26 nominated by the cabinet.

The United States still considers the Maoists as terrorists. The result will also be hard to stomach for giant neighbor India, which is worried it may encourage its own Maoist insurgency, and Nepal's conservative army which had been resisting absorbing Maoist fighters into its ranks.

The election, and the abolition of the monarchy, had been the main demands of the Maoists during their decade-long insurgency, in which more than 13,000 people died.

Some analysts said the Maoists and mainstream political parties had set "peace, democracy and economic prosperity" as a common agenda for one of the world's poorest countries.

"The people have recognized the Maoists as main agents for these goals," said Yubaraj Ghimire, editor of the news magazine, Samay.

(Editing by Krittivas Mukherjee and Alison Williams)