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Nepal (01/04)For the most current version of this Note, see Background Notes A-Z.
PROFILE OFFICIAL NAME:
Geography People Government Economy PEOPLE 
Among the earliest inhabitants were the Newars of the Kathmandu Valley and aboriginal Tharus in the southern Terai region. The ancestors of the Brahman and Chetri caste groups came from India, while other ethnic groups trace their origins to Central Asia and Tibet, including the Gurungs and Magars in the west, Rais and Limbus in the east, and Sherpas and Bhotias in the north. In the Terai, a part of the Ganges Basin with 20% of the land, much of the population is physically and culturally similar to the Indo-Aryan people of northern India. People of Indo-Aryan and Mongoloid stock live in the hill region. The mountainous highlands are sparsely populated. Kathmandu Valley, in the middle hill region, constitutes a small fraction of the nation's area but is the most densely populated, with almost 5% of the population. Religion is important in Nepal; Kathmandu Valley has more than 2,700 religious shrines alone. Nepal is about 81% Hindu. The constitution describes the country as a "Hindu Kingdom," although it does not establish Hinduism as the state religion. Buddhists account for about 11% of the population. Buddhist and Hindu shrines and festivals are respected and celebrated by all. Nepal also has small Muslim and Christian minorities. Certain animistic practices of old indigenous religions survive. Nepali is the official language, although a dozen different languages and about 30 major dialects are spoken throughout the country. Derived from Sanskrit, Nepali is related to the Indian language, Hindi, and is spoken by about 90% of the population. Many Nepalese in government and business also speak English. Early History After 1800, the heirs of Prithvi Narayan Shah proved unable to maintain firm political control over Nepal. A period of internal turmoil followed, heightened by Nepal's defeat in a war with the British from 1814 to 1816. Stability was restored after 1846 when the Rana family gained power, entrenched itself through hereditary prime ministers, and reduced the monarch to a figurehead. The Rana regime, a tightly centralized autocracy, pursued a policy of isolating Nepal from external influences. This policy helped Nepal maintain its national independence during the colonial era, but it also impeded the country's economic development. In 1950, King Tribhuvan, a direct descendant of Prithvi Narayan Shah, fled his "palace prison" to newly independent India, touching off an armed revolt against the Rana administration. This allowed the return of the Shah family to power and, eventually, the appointment of a non-Rana as prime minister. A period of quasiconstitutional rule followed, during which the monarch, assisted by the leaders of fledgling political parties, governed the country. During the 1950s, efforts were made to frame a constitution for Nepal that would establish a representative form of government, based on a British model. Democracy Develops Declaring parliamentary democracy a failure 18 months later, King Mahendra dismissed the Koirala government and promulgated a new constitution on December 16, 1962. The new constitution established a "partyless" system of panchayats (councils) which King Mahendra considered to be a democratic form of government closer to Nepalese traditions. As a pyramidal structure progressing from village assemblies to a Rastriya Panchayat (National Parliament), the panchayat system enshrined the absolute power of the monarchy and kept the King as head of state with sole authority over all governmental institutions, including the cabinet (Council of Ministers) and the Parliament. King Mahendra was succeeded by his 27 year-old son, King Birendra, in 1972. Amid student demonstrations and anti-regime activities in 1979, King Birendra called for a national referendum to decide on the nature of Nepal's government--either the continuation of the panchayat system with democratic reforms or the establishment of a multiparty system. The referendum was held in May 1980, and the panchayat system won a narrow victory. The king carried out the promised reforms, including selection of the prime minister by the Rastriya Panchayat. Movement To Restore Democracy An interim government was sworn in on April 19, 1990, headed by Krishna Prasad Bhattarai as Prime Minister presiding over a cabinet made up of members of the Nepali Congress Party, the communist parties of Nepal, royal appointees, and independents. The new government drafted and promulgated a new constitution in November 1990, which enshrined fundamental human rights and established Nepal as a parliamentary democracy under a constitutional monarch. International observers characterized the May 1991 elections as free and fair in which the Nepali Congress won 110 seats out of 205 to form the government. In mid-1994, the Parliament was dissolved due to dissension within the Nepali Congress Party. The subsequent general election, held November 15, 1994, gave no party a majority. The elections resulted in a Nepali Congress defeat and a hung Parliament, with a minority government led by the United Marxist and Leninist Party (UML); this made Nepal the world's first communist monarchy, with Man Mohan Adhikary as Prime Minister. The next 5 years saw five successive unstable coalition governments. Following of the May 1999 parliamentary elections, the Nepali Congress Party once again headed a majority government after winning a clear majority (113 out of 205). But the pattern of short-lived governments persisted. There were three successive Nepali Congress Party Prime Ministers after the 1999 elections: K.P. Bhattarai (5/31/99-3/17/00); G.P. Koirala (3/20/00-7/19/01); and Sher Bahadur Deuba (7/23/01-10/04/02). On June 1, 2001, Crown Prince Dipendra reportedly shot and killed his father, King Birendra; his mother, Queen Aishwarya; his brother; his sister; his father's younger brother, Prince Dhirendra; and several aunts, before turning the gun on himself. Two days after his death, the late King's surviving brother Gyanendra was proclaimed King. The leaders of the Maoist United People's Front had begun a violent insurgency in February 1996, waged through killings, torture, bombings, kidnappings, extortion, and intimidation against civilians, police, and public officials in more than 50 of the country's 75 districts. Approximately 7,000 police, civilians, and insurgents have been killed in the conflict since 1996. The Government and Maoists held peace talks in August, September, and November 2001, but they were unsuccessful, and the Maoists resumed their violent insurgency. Shortly after the 2001 peace talks failed, the King declared a state of emergency, and the Parliament approved this declaration by a two-thirds vote. On the recommendation of Prime Minister Deuba, on May 22, 2002, the King dissolved the House; 6 months later, he dismissed the Prime Minister. The King retained full control of the army and government, appointing Lokendra Bahadur Chand Prime Minister. The Maoists and the Government declared a second ceasefire on January 29, 2003. Peace talks between the Chand government and the Maoists were held in April and May 2003. In June 2003, as a result of political party demonstrations against the royally appointed government, Prime Minister Chand resigned, and the King appointed Surya Bahadur Thapa as Prime Minister. Thapa’s government held a third round of negotiations with the Maoists in August 2003. On August 27, 2003, the Maoists unilaterally broke off negotiations, called an end to the ceasefire, and resumed hostilities against the government. GOVERNMENT AND POLITICAL CONDITIONS Since dismissing the elected prime minister in the latter part of 2002, the King has appointed two Prime Ministers, one in October 2002 and one in June 2003. With the dissolution of Parliament in May 2002 and the expiration of local bodies’ terms in July 2002, Nepal currently has no elected representatives at either the national or local level. Nepal's judiciary is legally separate from the executive and legislative branches and has increasingly shown the will to be independent of political influence. The judiciary has the right of judicial review under the constitution. The king appoints the chief justice and all other judges to the supreme, appellate, and district courts upon the recommendation of the Judicial Council. All lower court decisions, including acquittals, are subject to appeal. The Supreme Court is the court of last appeal. The king may grant pardons and may suspend, commute, or remit any sentence by any court. Human Rights Security personnel continue to commit numerous human rights violations. The Maoists have continued and increased tactics of kidnapping, torture, bombings, intimidation, killings, and conscription of children. Within the Nepalese security force, violations ranging from disappearances to summary executions are recorded. There are three major daily English-language newspapers, The Kathmandu Post, The Himalayan Times, and The Rising Nepal, of which the latter and its vernacular sister publication are owned by a government corporation. There are literally hundreds of smaller daily and other periodicals that are privately owned and of diverse journalistic quality. Views expressed since the 1990 move to democracy are varied and vigorous. The Government has issued licenses to 43 FM radio stations, while 4 television stations -- with a fifth set to begin in mid-2004--are privately owned and operated due to liberalization of licensing regulations. Radio Nepal and Nepal Television are government-owned and operated. There are nearly 200 cable television operators nationwide, and satellite dishes to receive television broadcasts abound. Although some restrictions continue on freedom of expression, the law strictly forbidding the media to criticize or satirize the king or any member of the royal family has not been enforced in recent months. Since the King’s October 4, 2002 dissolution of the cabinet, critical op-ed pieces have appeared, and negative commentary by civil society has been liberally reported in the media without repercussion. Proselytization is illegal. Trafficking in women and child labor remain serious problems. Discrimination against women and lower castes is prevalent. Principal Government Officials Cabinet Ministers Nepal maintains an embassy in the United States at 2131 Leroy Place, NW, Washington, DC 20008 (tel. 202-667-4550; fax: 202-667- 5534). The Nepalese Mission to the United Nations is at 300 E. 46th Street, New York, NY 10017. ECONOMY Nepal launched its 10th economic development plan in 2002; its currency has been made convertible, and 16 state enterprises have been privatized, 2 liquidated, and 2 dissolved. Foreign aid accounts for more than half of the development budget. The Government of Nepal has shown increasing commitment to fiscal transparency, good governance, and accountability. Also in 2002 the government began to prioritize development projects and eliminate wasteful spending. In consultation with civil society and donors, the government cut 160 development projects that were driven by political patronage. Agriculture remains Nepal's principal economic activity, employing 81% of the population and providing 38% of GDP. Only about 25% of the total area is cultivable; another 33% is forested, and most of the rest is mountainous. Rice and wheat are the main food crops. The lowland Terai region produces an agricultural surplus, part of which supplies the food-deficient hill areas. Because of Nepal’s dependence on agriculture, the annual monsoon rain, or lack of it, strongly influences economic growth. Nepal’s total exports increased by about 3.6%, primarily due to improved figures for readymade garments and jewelry, while imports grew by about 17% in FY 2002-03. Thus the trade deficit for the first 9 months of FY 2002-03 increased 27% from the previous year to $705 million. Real GDP growth during 1996-2002 averaged less than 5%. Real growth experienced a one-time jump in 1999, rising to 6% before slipping back to below 5%. In FY 2001-2002, real GDP growth declined by -0.5 %, its lowest point in 20 years. The economy recovered in the following year, however, with GDP growth estimated at 2.4%. Despite the growing trade deficit, Nepal's balance of payments has increased due to money sent home from Nepalis working abroad. In addition, Nepal receives substantial amounts of external assistance from India, the United Kingdom, the United States, Japan, Germany, and the Scandinavian countries. Several multilateral organizations, such as the World Bank, the Asian Development Bank, and the UN Development Program, also provide assistance. In September 2003 Nepal acceded to the World Trade Organization. With eight of the world's 10 highest mountain peaks--including Mt. Everest at 8,848 m (29,000 ft.)--Nepal is a tourist destination for hikers and mountain climbers. Yet with a worsening internal security situation and a global economic slowdown, tourism declined 34% in FY 2002. Swift rivers flowing south through the Himalayas have massive hydroelectric potential to service domestic needs and growing demand from India. Several hydroelectric projects, at Kulekhani and Marsyangdi, were completed in the mid- to late 1980s. In the early nineties, one large public sector project and a number of private projects were planned; some have been completed. The most significant privately financed hydroelectric projects currently in operation are the Khimti Khola (60 MW) and the Bhote Koshi (36 MW). The environmental impact of Nepal's hydroelectric projects has been limited by the fact that most are "run-of-river," with only one storage project undertaken to date. The largest under active consideration is the private sector West Seti (750 MW) storage project that is dedicated to electricity exports. An Australian company is promoting the project for implementation along build-own-transfer lines and is presently negotiating a power purchase agreement with the Indian Power Trading Corporation. Private investment in the hydropower sector over the past 8 years has exceeded $360 million. Currently domestic demand for electricity is increasing at 8%-10% a year. Population pressure on natural resources is increasing. Over-population is already straining the "carrying capacity" of the middle hill areas, particularly the Kathmandu Valley, resulting in the depletion of forest cover for crops, fuel, and fodder and contributing to erosion and flooding. Although steep mountain terrain makes exploitation difficult, mineral surveys have found small deposits of limestone, magnesite, zinc, copper, iron, mica, lead, and cobalt. Progress has been achieved in education, health, and infrastructure. A countrywide primary education system is under development, and Tribhuvan University has several campuses. Although eradication efforts continue, malaria has been controlled in the fertile but previously uninhabitable Terai region in the south. Kathmandu is linked to India and nearby hill regions by an expanding highway network. DEFENSE RNA units have served with distinction alongside U.S. forces in places such as Haiti, Iraq, and Somalia. The RNA has also contributed more than 40,000 peacekeepers to a variety of UN-sponsored peacekeeping missions such as the UN Interim Force in Lebanon (UNIFIL), the UN Protective Force (UNPROFOR) in the Former Yugoslavia, the UN Operational Mission in Somalia II (UNOSOMII), the UN Mission in Haiti (UNMIH) and the UN Mission of Support in East Timor (UNTAET). While concurrently fighting a growing Maoist insurgency within Nepal, RNA units are also currently serving in the UN Mission in Sierra Leone (UNAMSIL) and the United Nations Organization Mission in the Democratic Republic of the Congo (MONUC). The world famous Gurkha forces are not synonymous with the RNA; although of the same ethnic stock, approximately 3,400 Nepalese Gurkhas serve in the British Army and 40,000 serve in the Indian Army. The U.S. Pacific Command (USPACOM) coordinates U.S. military engagement with Nepal through the Defense Attaché Office while the Office of Defense Cooperation administers the U.S. security assistance program. U.S. military assistance to the RNA consists of $16.95 million in grant Foreign Military Financing (FMF) since 2002, annual professional and technical training provided under the grant International Military Education and Training program (IMET) ($500,000 in FY03), additional training provided under the new Counterterrorism (CT) Fellowship ($200,000 for FY04), and approximately $2 million to date under Enhanced International Peacekeeping Capabilities (EIPC) funding to increase the pool of international peacekeepers and promote interoperability. Many RNA officers attend U.S. military schools, including the U.S. Army War College, the U.S. Army Command and General Staff College (CGSC), and various conferences and seminars including those provided by the National Defense University (NDU) and the Asia-Pacific Center for Strategic Studies (APCSS). FOREIGN RELATIONS Nepal has played an active role in the formation of the economic development-oriented South Asian Association for Regional Cooperation (SAARC) and is the site of its secretariat. On international issues, Nepal follows a nonaligned policy and often votes with the Nonaligned Movement in the United Nations. Nepal participates in a number of UN specialized agencies and is a member of the World Bank, International Monetary Fund, Colombo Plan, and the Asian Development Bank. U.S.-NEPAL RELATIONS The United States has provided more than $746 million in bilateral economic assistance to Nepal since 1951. In recent years, annual bilateral U.S. economic assistance through the Agency for International Development (USAID -- http://www.usaid.gov/np) has averaged $27 million. In FY 2003 aid increased to $40 million, with much of the increase dedicated to conflict mitigation programs. At present, its current activities are programmed to support the areas of health and family planning, democracy and governance, promoting peace, agriculture, and natural resources and hydropower. The United States also contributes to international institutions and private voluntary organizations working in Nepal. U.S. contributions to multilateral organizations to date approach an additional $725 million, including humanitarian assistance. The Peace Corps operation in Nepal--established in 1962 and one of the largest in the world--has projects in agriculture, education, health, and other rural programs. About 100 Peace Corps Volunteers work in Nepal. The Peace Corps and USAID coordinate closely to increase the impact of the Peace Corps' Small Project Assistance Grants.
Principal U.S. Officials The U.S. Embassy in Nepal is located in Pani Pokhari, Kathmandu and carries all the latest information for travelers as well as providing links to other U.S. Government sites (tel: [977] (1) 441-1179; fax: [977] (1) 441-9963). The U.S. Agency for International Development (USAID) is located in Rabi Bhawan, Kathmandu (tel: [977] (1) 427-0144; fax: [977] (1) 427-2357). The Peace Corps office is located in Kunja Niwas, Shiva Marga 186, Maharajgunj, Kathmandu, Nepal. (tel: [977] (1) 441-9581; fax: [977] (1) 441-0075). The American Center (Public Affairs Section) is located in Gyaneshwor, Kathmandu (tel: [977] (1) 441-5845; fax: [977] (1) 441-5847). For the most current version of this Note, see Background Notes A-Z. |
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