A new government was then implemented by the Seven-Party Alliance. Parliament and the new government supported the ceasefire and began negotiations with the Maoists on the basis of the twelve-point agreement. Both sides agreed that a new constituent assembly should be elected to draft a new constitution and decide the fate of the monarchy. The Maoists wanted this process to end with the end of Nepal as a republic.  There was an eight-point agreement between the government and the Maoist rebels. After talks with the prime minister, Prachanda told the media that peace talks were progressing despite setbacks in the past. The rebel leader`s public appearance caused a stir in Nepal. The Maoist leader affirmed that understanding would give Nepal a new political direction. Prachanda said the deal was « historic » and said Nepal would soon be transformed into a republic after the Constituent Assembly elections. He was the first Prime Minister of Nepal after the abolition of the monarchy. Prachanda met with Prime Minister Girija Prasad Koirala on June 16, 2006, which was considered his first visit to the capital Kathmandu in more than a decade.   This meeting led to the Comprehensive Peace Agreement to dissolve parliament, integrate CPN(M) into a new transitional government, draft a new constitution, and dissolve CPN(M)`s « people`s governments » operating in rural Nepal.
The two sides also agreed to dive under international supervision at a later date.  On the 18th. In September 2007, CPN(M) left the coalition government ahead of the Constituent Assembly elections and called for the proclamation of a republic by parliament and a system of proportional representation in elections. The CPN(M) joined the government on 30 December 2007 after agreeing to abolish the monarchy after the election and to have a system of partial proportional representation at election.  The Maoist`s ability to establish and prosper as a counter-power against the construction of the local state nurtured by world imperialism may have ushered in the fourth phase of the new democratic transformation in Nepal. The constancy and strength of the Nepalese revolutionaries dealt a fatal blow to the corporatist-monarchist-grand-terrain alliance with petty-bourgeois parliamentarism. In a way, this alliance was sponsored and nurtured by the imperialists in order to gain decisive control over the region. India`s decision not to renew the 1978 treaties on trade and transit rights in 1989, resulting in a major strangulation of the Nepalese economy, pushed through this « nationalist » compromise in 1990.
It allowed the imperialists to control the arbitrariness of absolutism and the radicalization of the democratic movement and to align local economic political arrangements in their favor. However, the energy released during this process could not be completely limited in this official order. On the contrary, as we have already mentioned, it allowed the radicals to align the democratic movement with the oppressed masses, independently of the hesitant petty-bourgeois democrats who feared radical structural change. .