For the most current version of this Note, see Background Notes A-Z.

PROFILE

OFFICIAL NAME:
Kingdom of Nepal

Geography Mountains in Nepal; USAID Photo
Area: 147,181 sq. km. (56,136 sq. mi.); about the size and shape of Tennessee, bordering China and India.
Cities: Capital--Kathmandu (pop. l.l million).Other cities--Biratnagar, Patan, Pokhara, Birganj, Dharan, Nepalganj Terrain: Flat and fertile in the southern Terai region; terraced cultivation and swiftly flowing mountain rivers in the central hills; and the high Himalayas in the north. Eight of the world's ten highest peaks are in Nepal. Kathmandu, the capital, is in a broad valley at 1,310 meters (4,300 ft.) elevation.
Climate/Time Zone: Subtropical in the south to cool summers and severe winters in the northern mountains. The monsoon season is from June through September and brings 75 to 150 centimeters (30-60 in.) of rain. Showers occur almost every day. Nepal is 10 hours and 45 minutes ahead of Eastern Standard Time and does not observe Daylight Saving Time.

People
Nationality: Noun--Nepali (sing.). Adjective--Nepalese or Nepali.
Population (2001 census): 23.4 million.
Annual growth rate: 2.3%.
Ethnic groups (caste and ethnicity are often used interchangeably): Brahman, Chetri, Newar, Gurung, Magar, Tamang, Rai, Limbu, Sherpa, Tharu, and others.
Religions: Hinduism (86.5%), Buddhism (7.8%), Islam (3.5%) and others (2.2%). Languages: Nepali and more than 12 others.
Education: Years compulsory--0. Attendance--primary 64%, secondary 30%. Literacy--48% (52% male, 18% female).
Health: Infant mortality rate--75.93/1,000. Life expectancy--58.3 yrs. (male), 57.35 yrs. (female). Work force: Agriculture--81%; industry--3%; services--11%; other--5%.

Government
Type: Parliamentary Democracy and Constitutional Monarchy.
Constitution: November 9, 1990.
Branches: Executive--prime minister (head of government), king (head of state). Legislative--Parliament consisting of House of Representatives (Lower House: 205 members) and National Assembly (Upper House: 60 members). Judicial--Supreme Court, 11 appellate courts, 75 district courts.
Subdivisions: 5 development regions, 14 zones and 75 districts.
Political parties (Lower House representation): Nepali Congress Party, United Marxist-Leninist (Communist Party of Nepal), National Democratic Party (RPP), Nepal Goodwill Party (NSP), National People's Front, others. Elections: At least every 5 years.
Suffrage: Universal over 18. Central government budget (2001): $1.3 billion.
Defense/Police (2001): $154 million.
National Day: Democracy Day, Falgun 7 (mid-February).

If a scroll bar appears below the following table, swipe the table to move left/right of the dashed line.
Flag: Nepal flag

Economy
GDP (2001-est.): $5.5 billion.
Annual growth rate: 5.5%.
Per capita income: $242.
Avg. inflation rate (2000-01): 2.1%.
Natural resources: Water, hydropower, scenic beauty, limited but fertile agricultural land, timber.
Agriculture (37% of GDP): Products--rice, wheat, maize, sugarcane, oilseed, jute, millet, potatoes. Land--25% cultivated.
Industry (20% of GDP): Types--carpets, garments, cement, cigarettes, bricks, sugar, soap, matches, jute, hydroelectric power.
Trade (2001-est.): Exports--$697 million: carpets, garments. Major markets--Germany, U.S. Imports--$1.3 billion: manufactured goods. Major supplier--India.
Official exchange rate (October 2001): 75.9 Nepalese rupees=U.S.$1.
Fiscal year: July 16-July 15.

PEOPLE
Two Boys in Nepal; USAID PhotoPerched on the southern slopes of the Himalayan Mountains, the Kingdom of Nepal is as ethnically diverse as its terrain of fertile plains, broad valleys, and the highest mountain peaks in the world. The Nepalese are descendants of three major migrations from India, Tibet, and Central Asia.

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 86% Hindu. The constitution describes the country as a "Hindu Kingdom," although it does not establish Hinduism as the state religion. Buddhists account for about 8% 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.

HISTORY

Early History
Modern Nepal was created in the latter half of the 18th century when Prithvi Narayan Shah, the ruler of the small principality of Gorkha, formed a unified country from a number of independent hill states. The country was frequently called the Gorkha Kingdom, the source of the term "Gurkha" used for Nepali soldiers.

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
In early 1959, King Mahendra issued a new constitution, and the first democratic elections for a national assembly were held. The Nepali Congress Party, a moderate socialist group, gained a substantial victory in the election. Its leader, B.P. Koirala, formed a government and served as prime minister.

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
In 1990, the political parties again pressed the king and the government for change. Leftist parties united under a common banner of the United Left Front and joined forces with the Nepali Congress Party to launch strikes and demonstrations in the major cities of Nepal. This "Movement to Restore Democracy" was initially dealt with severely, with more than 50 persons killed by police gunfire and hundreds arrested. In April, the king capitulated. Consequently, he dissolved the panchayat system, lifted the ban on political parties, and released all political prisoners.

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. The 1994 elections resulted in a Nepali Congress defeat and a hung Parliament, with a minority government led by the United Marxist and Leninist Party (UML). The next 5 years saw five successive governments. Although the Nepali Congress won a clear majority (113 out of 205) in the latest parliamentary elections, held in 1999, the pattern of short-lived governments persists, with three different Nepali Congress Party Prime Ministers holding office from mid-1999 to mid-2001.

GOVERNMENT AND POLITICAL CONDITIONS
Nepal is a constitutional monarchy with a democratic, parliamentary form of government that is multiethnic, multilingual, Hindu, and retains the king in the role of head of state. The former "partyless" panchayat system of government was abolished in April 1990 (see "Movement to Restore Democracy.").

The 1994 election defeat of the Nepali Congress Party by the UML made Nepal the world's first communist monarchy, with Man Mohan Adhikary prime minister. 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 and led to several years of unstable coalition governments. As of the May 1999 general elections, the Nepali Congress Party once again heads a majority government. There have been three Nepali Congress Party Prime Ministers since 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-present). The final distribution of seats in Parliament gave the Nepali Congress 113; the United Marxist-Leninist Party 69; the National Democratic Party 11; the National People's Front 5; the Nepal Goodwill Party 5; the Workers and Peasants Party 1; and the United People's Front 1.

In February 1996, the leaders of the Maoist United People's Front began a violent insurgency, 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. About 1,800 police, civilians, and insurgents have been killed in the conflict since 1996. In July 2001 Prime Minister Deuba announced a cease-fire, which the Maoists pledged to observe, as part of a government effort to seek a negotiated solution to the conflict. Although Maoist-instigated intimidation and extortion continue, the killings have largely subsided since the cease-fire was announced. The government and Maoists held talks in August and September 2001.

Political parties agreed in 1991 that the monarchy would remain to enhance political stability and provide an important symbol of national identity for the culturally diverse Nepali people. The King exercises limited powers, including the right to declare a state of emergency in the event of war or armed revolt, with the advice and consent of the Council of Ministers and the Prime Minister. The King's declaration of a state of emergency must be approved by a two-thirds majority of the lower house of the Parliament. In general, however, the King is largely disassociated from direct involvement in day-to-day government activities.

On June 1, 2001, Crown Prince Dipendra 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. After his death two days later, the late King's surviving brother Gyanendra was proclaimed king.

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.

There are hundreds of small privately owned newspapers in addition to one English and one Nepali-language state-owned newspapers. Views expressed since the 1990 move to democracy are varied and vigorous. As of September 2001, there were 19 private radio stations, a government radio station, and a government-owned television station. The law allows the issuance of private television broadcasting licenses. Although one such license was issued in 1994, the recipient failed to begin broadcasting within the 6-year window. There are nearly 200 cable television operators nationwide, and satellite dishes to receive television broadcasts proliferate. The law strictly forbids the media to criticize or satirize the king or any member of the royal family.

Principal Government Officials
King--Gyanendra Bir Bikram Shah Dev
Queen--Komal Rajya Laxmi Devi Shah

Cabinet Ministers
Prime Minister; Royal Palace Affairs; Foreign Affairs; Defense; Industry, Commerce, and Supplies; General Administration; Women, Children, and Social Welfare; Science and Technology; Law and Justice; Parliamentary Affairs--Sher Bahadur Deuba
Home Affairs and Local Development--Khum Bahadur Khadka
Finance--Ram Sharan Mahat
Agriculture and Cooperatives--Mahesh Acharya
Education and Sports--Amod Prasad Upadhyaya
Information and Communications--Jaya Prakash Prasad Gupta
Labor and Transport Management--Palten Gurung
Physical Planning and Works--Chiranjibi Wagle
Forest and Soil Conservation--Gopal Man Shrestha
Water Resources--Bijaya Kumar Gachhedar
Population and Environment--Prem Lal Singh
Health--Sharad Singh Bhandari
Culture, Tourism, and Civil Aviation--Bal Bahadur K.C.

Ambassador to the United States--Dinesh Bhattarai, Charge d'Affaires Ambassador to the United Nations--Marari Raj Sharma

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 ranks among the world's poorest countries with a per capita income of just over $240. An isolated, agrarian society until the mid-20th century, Nepal entered the modern era in 1951 without schools, hospitals, roads, telecommunications, electric power, industry, or civil service. The country has, however, made progress toward sustainable economic growth since the 1950s and is committed to a program of economic liberalization.

Nepal will complete its ninth economic development plan in 2002; its currency has been made convertible, and 17 state enterprises have been privatized. Foreign aid accounts for more than half of the development budget. Government priorities over the years have been the development of transportation and communication facilities, agriculture, and industry. Since 1975, improved government administration and rural development efforts have been emphasized.

Agriculture remains Nepal's principal economic activity, employing 80% of the population and providing 37% of GDP. Only about 20% of the total area is cultivable; another 33% is forested; 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.

Economic development in social services and infrastructure has made progress. A countrywide primary education system is under development, and Tribhuvan University has several campuses. Although eradication efforts continue, malaria had been controlled in the fertile but previously uninhabitable Terai region in the south. Kathmandu is linked to India and nearby hill regions by road and an expanding highway network.

Major towns are connected to the capital by telephone and domestic air services. The export-oriented carpet and garment industries have grown rapidly in recent years and together now account for approximately 70% of merchandise exports.

Nepal's merchandise trade balance has improved somewhat in recent years with the growth of the carpet and garment industries. In FY 2000-01 exports posted a greater increase (14%) than imports (4.5%), helping bring the trade deficit down by 4% from the previous year to $749 million. Trade with India rose rapidly after conclusion of the 1996 bilateral trade treaty between the two countries, and now accounts for 43% of all exports. Indian efforts to revise the treaty, which comes up for a 5-year review in December 2001, could dampen Nepal's export growth. The annual monsoon rain, or lack of it, strongly influences economic growth. From 1996 to 1999, real GDP growth averaged less than 4%. The growth rate recovered in 1999, rising to 6% before slipping slightly in 2001 to 5.5%.

Strong export performance, including earnings from tourism, and external aid have helped improve the overall balance-of-payments situation and increase international reserves. Nepal receives substantial amounts of external assistance from India, the People's Republic of China, 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 June 1998, Nepal submitted its memorandum on a foreign trade regime to the WTO and in May 2000 began direct negotiations on its accession.

Progress has been made in exploiting Nepal's major economic resources--tourism and hydroelectricity. With eight of the world's 10 highest mountain peaks--including Mt. Everest at 8,800 m (29,000 ft)-- hiking, mountain climbing, and other tourism is growing. Swift rivers flowing south through the Himalayas have massive hydroelectricity potential to service domestic needs and the growing demand from India. The two countries have joint irrigation-hydroelectric projects on the Kosi, Trisuli, and Gandaki Rivers. Several other hydroelectric projects, at Kulekhani and Marsyangdi, were completed in the mid- to late 1980s. In the early 1990s, one large public sector project and a number of private projects were planned; some have been completed. The most significant private sector 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 which is dedicated to exports. Negotiations with India for a power purchase agreement have been underway for several years, but agreement on pricing and capital financing remains a problem. Currently 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.

DEFENSE
Nepal's military consists of an army of about 40,000 troops organized into seven infantry brigades; a Royal Palace brigade; one artillery; one engineer; one signal parachute; one logistics; one transportation; and one air transportation brigades. There are 36 separate companies located throughout the country. U.S. training assistance is provided via an annual International Military Education and Training Program (IMET) grant . Training assistance is provided by India, Pakistan, Bangladesh, and the United Kingdom.

His Majesty King Gyanendra Bir Bikram Shah Dev is the Supreme Commander of the Royal Nepal Army (RNA) while Prime Minister Sher Bahadur Deuba serves as Minister of Defense. General Prajwalla S.JB. Rana is the Chief of Army Staff. The RNA has contributed more than 36,000 peacekeepers to a variety of UN sponsored peacekeeping missions such as UN Interim Force in Lebanon (UNIFIL), the UN Protective Force (UNPROFOR), UN Operational Mission Somalia II (UNOSOMII), and UN Mission in Haiti (UNMIH). Currently, Nepal is sending an 800-man battalion to serve in the peacekeeping mission in Sierra Leone (UNAMSIL).

The U.S.-Nepali military relationship focuses on support for democratic institutions, civilian control of the military, and the professional military ethic to include respect for human rights. Both countries have had extensive contact over the years. RNA units have served with distinction alongside American forces in places such as Haiti, Iraq, and Somalia.

U.S.-Nepali military engagement continues today through IMET, Enhanced International Peacekeeping Capabilities (EIPC), and various conferences and seminars. The U.S. military sends many RNA officers to America to attend military schooling such as the Command and General Staff School and the U.S. Army War College. The IMET budget for FY2001 was $220,000.

The EPIC program is an interagency program between the Department of Defense and the Department of State to increase the pool of international peacekeepers and to promote interoperability. Nepal received about $1.9 million in EPIC funding.

Commander in Chief, Pacific (CINCPAC) coordinates military engagement with Nepal through the Office of Defense Cooperation (ODC). The ODC Nepal is located in the American Embassy, Kathmandu Nepal.

HUMAN RIGHTS
Progress has been achieved in the transition to a more open society and greater respect for human rights since political reform began in 1990; however, substantial problems remain. Poorly trained police forces sometimes use excessive force in quelling violent demonstrations. In addition, there have been reports of torture under detention and widespread reports of custodial abuse. In 2000, the government established the Human Rights Commission, a government-appointed commission with a mandate to investigate human rights violations. To date, the Commission has investigated 51 complaints. The government is sometimes slow to follow the Commission's recommendations or to enforce accountability for recent and past abuses.

Some restrictions continue on freedom of expression. Trafficking in women and child labor remain serious problems. Discrimination against women and lower castes is prevalent.

FOREIGN RELATIONS
As a small, landlocked country wedged between two larger and far stronger powers, Nepal seeks good relations with both India and China. Nepal formally established relations with China in 1956, and since then their bilateral relations have generally been very good. Because of strong cultural, religious, linguistic, and economic ties, Nepal's association with India traditionally has been close. India and Nepal restored trade relations in 1990, after a break caused by India's security concerns over Nepal's relations with China. A bilateral trade treaty was signed in 1996.

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.-NEPALI RELATIONS
The United States established official relations with Nepal in 1947 and opened its Kathmandu embassy in 1959. Relations between the two countries have always been friendly. U.S. policy objectives toward Nepal include supporting democratic institutions and economic liberalization, promoting peace and stability in South Asia, supporting Nepalese independence and territorial integrity, and alleviating poverty.

The United States has provided more than $670 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) has averaged $23 million. USAID supports agriculture, health, family planning, environmental, democratization, and hydropower development efforts in Nepal. 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 84 Peace Corps volunteers work in Nepal.

Principal U.S. Officials
Ambassador--Vacant
Charge d'Affaires, a.i.--Larry Dinger
Counselor for Administrative Affairs--Michael Hoza
USAID Director--Joanne Hale
Peace Corps Director--David O'Connor
Political and Economic Officer--Patricia Mahoney
Consular Officer--Steven Brault
Public Affairs Officer--Robert Kerr
Regional Security Officer--Kevin Wetmore
Regional Environment Officer--Michael DeTar
Political/Military Officer--Peter Sherman
Defense Cooperation Officer--Maj. Peter Fowler, USA

The U.S. Embassy in Nepal is located in Pani Pokhari, Kathmandu (tel: [977] (1) 411-179. Fax: [977] (1) 419-963). The U.S. Agency for International Development is located in Rabi Bhawan, Kathmandu (tel: [977] (1) 270-144; Fax: [977] (1) 272-357). The Peace Corps office is located in Tej Bhawan, Kathmandu (Tel: [977] (1) 410-707; Fax: [977] (1) 411-762). The American Center (Office of Public Diplomacy) is located in Gyaneshwor, Kathmandu (Tel: [977] (1) 415-845; Fax: [977] (1) 415-847).

[This is a mobile copy of Nepal (10/01)]