The two new economic giants of this century, India and China, are both Asian. However, they are sometimes held up as alternative models of development for their continent to follow. China's discipline and efficiency comes at the cost of political liberalism; India's greater separation of powers gives more scope for ingenuity and robust adjustment to economic downturns but adds layers of bureaucracy and uncertainty for investors awaiting political decisions.

Sometimes, however, one visits a country that reminds one that simplified options are just that: simplified. In my case, the reminder occurred last week while visiting Nepal on official European Parliament business.

Nepal is a neighbour to both India and China. A small country of only 27 million people, it is dwarfed by its two neighbours who between them account for two-thirds of the world population.

Like any small country it keeps a wary eye on both its large neighbours. China's main concern relates to border crossings. My impression was, indeed, that at the popular level, ordinary people are less wary of China than of India. Tensions with the latter country tend to arise over claims to natural resources, particularly water, with deep suspicions of negotiated settlements often perceived to favour the more muscular country. On the other hand a large unknown number of Nepalis reside in India as they can cross the border without a passport.

So which model of development has Nepal chosen to follow? China or India? Neither. The country, until very recently a monarchy, has struck out its own path. Culturally, it remains a largely Hindu country (80 per cent) with much of the rest of the population being Buddhist. Our EP delegation, of which I am vice-chairman, visited during the celebration of Buddha's birthday and it was impossible not to notice, and enjoy, the colourful festivities.

Politically, however, the country has taken a path that blends Indian democracy with political ideologies drawn from China as well as India. The government is a coalition of the Communist Party and the Nepal Congress Party, while the opposition is lead by the Maoists (inspired, yes, by the late legendary Chinese Communist leader, Mao Tse Tung). Or, rather, that was the situation that endured throughout the EP delegation's visit and which changed on the very day I departed.

Our delegation was visiting during a week in which a constitutional crisis was coming to a head.

The Parliament had been elected in 2008 and its term was due to come to an end last Friday. It had been elected after a decade of civil war. Its most important mission was to draw up a new Constitution, which would itself pave the way for new elections. However, disagreement about constitutional details had made a new document impossible to finalise. So the Constituent Assembly granted itself a year's extension, with the brief to finalise a new Constitution three months before its term is up.

The EP delegation may well have heard about the Cabinet's decision to propose a year's extension before the opposition did. On Thursday, the Prime Minister, Madhav Kumar Nepal, began his meeting with us by telling us what the Cabinet meeting he had just emerged from had decided.

I asked him about the Attorney General's advice and the possibility of a challenge to the Supreme Court. The Prime Minister's reply was none too clear. I am not sure if he already suspected what the price of the opposition's agreement was going to be: his (political) head, that is, his resignation to make way for a government of national consensus. Earlier in May, the Maoists had already called a six-day strike demanding the government's resignation.

The EP delegation's work included meeting ministers of government and representatives of the three major and numerous other minor political parties. The new Constitution will probably include a federated structure and its components were being debated.

Using economic-ecological geography as a guide, as one minor party wants, would make a single state out of all the inhabitants of the plains. Yet, that would encapsulate half the entire population. At the other extreme are proposals to have the elements made up of ethnic groups, although this approach might be too fragmentary, given that there are over 100 such groups.

In this situation, it was intriguing for me to note how the charismatic leader of the Maoist party had apparently persuaded many foreign ambassadors that it was his party that was best placed to help the country "get its act together", although whether the means he is prepared to use are all legitimate remains to be seen.

Meanwhile, the former king, now living in retirement, is raising his visibility. Many of his former subjects complain that law and order is too soft, nowadays, in comparison with his time. Notwithstanding other hardships I cannot see Nepal returning to a monarchical system.

But while I admire the individual path to peace and democratisation that this country is taking, I am none too sure that a short-term political solution is as yet within grasp.

Beyond the spell of Kathmandu it is the Himalayas which bewitched me. I shall never forget the beauty that is Everest, contrasting with the tragic effects being brought about by climate change. But, on the other hand, it was heart-warming to see the international programmes, many supported by Europe, investing in the ecological protection of this beautiful country.

Dr Attard Montalto is a Labour member of the European Parliament.

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