When his telephone rang one morning recently, the Kathmandu engineer was stunned to be hit with a demand for five million rupees (HK$542,000) by the Communist Party of Nepal (Maoist). But he was not overly concerned. A top party leader had once worked under him and was aware that besides making only a modest salary, the engineer's only other activity was to run meditation centres for a religious group. After he rang the Maoist leader to explain that he could only afford to 'donate' a few thousand rupees, his phone rang again - and this time the caller sounded vicious: 'Don't think you can get off the hook by appealing to senior leaders. Pay, or face the consequences.' The engineer now fears for his life. The problem posed by Nepal's armed political fundraisers has become so acute that in an unprecedented move, the British Embassy last week issued a public appeal to the Maoists to end the 'criminal extortions' and sincerely pursue the peace process. 'Maoists have continued to press Nepalis from all walks of life - businessmen, families, farmers, landowners, civil servants, development workers, educationists and factory workers - for money and food,' said the appeal issued on behalf of the Industrial Security Group, a Kathmandu-based umbrella organisation of bilateral chambers of commerce and industry and representatives from the US, Britain, India, Germany and France. The appeal came just one day after the Maoists shut down their liaison office in the Nepalese capital and went underground again, putting a question mark on the future of the continuing peace negotiations with the government. Since a ceasefire was declared earlier this year, two rounds of talks have been held between the government and the Maoists in an effort to bring an end to the seven-year armed insurgency that has killed more than 7,200 people. But instead of continuing with the talks after a new government was sworn in last month, the Maoists went into hiding in the countryside and issued a fresh set of demands. The unexpected move came after an official at their Kathmandu liaison office, set up to facilitate the talks, was briefly detained and questioned by the authorities about the extortion racket being conducted from the office. The frenetic extortion drive - the size of the 'donations' and the number of people targeted has increased exponentially - combined with the setting of pre-conditions for peace talks the government cannot possibly fulfil, have raised fears that the Maoists are busy re-arming their cadres before re-launching their 'people's war'. The Maoists and the government have both violated the 22-point accord signed in January, with the army having killed at least 17 rebels this year. But Padma Ratna Tuladhar, a facilitator for the talks, said he felt that despite the stalemate, both sides were open to communication, paving the way for a resumption of talks. A three-member United Nations peace mission recently started discussions with leaders from both sides in an effort to bring them back to the negotiating table. 'Ordinary people don't want the violence,' said Mr Tuladhar. 'The whole of civil society is in favour of talks, so that's putting pressure on both the government and the Maoists.' People in Kathmandu are on a knife's edge. On the one hand, they're helpless in the face of the Maoists' demands for money, and at the same time, there is the ever-present fear the rebels could return to violence. David Wood, head of the British aid agency the Department For International Development Nepal, said: 'The prospect of a renewal of the Maoist insurgency is extremely worrying. Peace is the pre-requisite for progress in poverty reduction in Nepal, but also development is necessary for peace to be sustainable and democratic.'