Figure 1. Nepal: Zonal Administrative Divisions, 1991

THE HIMALAYAN KINGDOMS of Nepal and Bhutan share a history of influence by Tibet, China, and India, and an interlude of British colonial guidance. Although the kingdoms are not contiguous, each country is bordered by China to the north and India on its other peripheries. Both kingdoms are ruled by hereditary monarchs and are traditional societies with predominantly agricultural economies; their cultures, however, differ. Nepal's Hinduism, a legacy of India's influence, defines its culture and caste-structured society. Bhutan's Buddhist practices and culture reflect India's influence by way of Tibet. The two countries' legal systems also reflect their heritage. Nepal's judicial system blends Hindu legal and English common law traditions. Bhutan's legal system is based on Buddhist law and English common law.

Nepal has existed as a kingdom centered in the Kathmandu Valley for more than 1,500 years (see fig. 1). The country is known for its majestic Himalayas and has nine of the fourteen peaks in the world over 8,000 meters, including Mount Everest and Annapurna I.

Modern Nepal began its evolution in the sixteenth century with the founding of the House of Gorkha by Dravya Shah in 1559. In the late eighteenth century, Gorkha conquests extended the kingdom through the Himalayas for almost 1,500 kilometers from the western boundary of Garhwal, India, through the territory of Sikkim in the east. In the early nineteenth century, Gorkha power came into conflict with the British East India Company. The resulting Anglo- Nepalese War (1814-16) was devastating for Nepal: the Treaty of Sagauli reduced the kingdom to the boundaries it has since occupied, less than 900 kilometers from east to west. For almost thirty years after the treaty was concluded, infighting among aristocratic factions characterized Nepal.

The next stage of Nepalese politics was the period of hereditary Rana rule--the establishment of a dictatorship of successive Rana prime ministers beginning with Jang Bahadur Kunwar in 1846. During the period of Rana rule, which lasted until the end of 1950, Nepal was governed by a landed aristocracy; parliamentary government was in name only. This period provided stability, but also inhibited political and economic development because the Ranas isolated the country and exercised total control over internal affairs. Although during this period Nepal was a constitutional monarchy with universal suffrage granted at age eighteen, political parties were not formed until the mid-twentieth century and were later banned. The longevity of the Rana dictatorship was also a result of a partnership between the rulers and the army. Patronage ensured loyal soldiers: the military supported the Rana prime ministers and, later, the Shah monarchs, who were figureheads during Rana rule.

In January 1951, the Ranas were forced to concede to the restoration of the monarchy, which then assumed charge of all executive powers: financial management, appointment of government officials, and command of the armed forces. The latter power became an increasingly useful tool for enforcing control. In 1962 King Mahendra Bir Bikram Shah Dev devised the centrally controlled partyless council system of government called panchayat (see Glossary). This system served as the institutional basis of the king's rule and was envisioned by the palace as a democratic administration although it functioned only at the king's behest. Incorporated into the 1962 constitution, the panchayat system was established at the village, district, and national levels. Successive changes in government and constitutional revisions did not weaken the powers of the absolute monarchy. In fact, a May 1980 referendum reaffirmed the status quo of the panchayat system and its continuation as a rubber stamp for the king. Elections in 1981 and 1986 were characterized by the lack of political programs.

Government by an absolute monarch behind a democratic façade lasted for some thirty years. Although many party members were exiled to India, opposition to the government and the panchayat system continued to grow, particularly in the late 1980s when the outlawed political parties announced a drive for a multiparty system. A coalition between the Nepali Congress Party and the Communist Party of Nepal was formed in late 1989. The increasing disillusionment with and unpopularity of King Birendra Bir Bikram Shah Dev's regime and the worsening economic situation caused by the trade and transit dispute with India added to the momentum of the incipient prodemocracy movement.

The dissolution of the Berlin Wall and the Soviet Union, and the successes of the prodemocracy movements in Eastern Europe in the late 1980s and early 1990s, had an impact in Nepal. In part as a result of the participatory experiences of Nepalese in India, movements arose to effect changes in Nepal's government and society. Nepal's longstanding history of continuity of rule and relative stability was challenged when the Movement for the Restoration of Democracy, or prodemocracy movement, was formally established on February 18, 1990, almost forty years after the end of Rana control. Demonstrations and rallies--accompanied by violence, arrests, and even deaths--were held throughout the country. Political unrest became widespread. Ethnic groups agitated for official recognition of their cultural heritage and linguistic tradition and demonstrated against the monarchy. The goal of the prodemocracy movement, however, was to establish a more representative democracy and to end the panchayat system.

The demonstrations and protests characterizing the prodemocracy movement gained momentum when the ban on political parties and activities was lifted in April 1990. That same month, the prime minister resigned, the Council of Ministers and the Rashtriya Panchayat (National Panchayat, or Parliament) were dissolved, and talks with the opposition were begun. A multiparty interim government replaced the panchayat system. The king nominated a four-member council, established a Constitution Recommendation Commission, and announced that he would begin an official inquiry into the deaths that had resulted from the prodemocracy demonstrations. In mid-May, a general amnesty was declared for all political prisoners. A draft constitution was announced in the summer of 1990. King Birendra wanted the draft amended to give him more leverage, but subsequent negotiations did not yield as much as he desired. In November 1990, the king finally approved and promulgated a new, more democratic constitution that vested sovereignty in the people.

The panchayat system finally ended in May 1991, when general elections, deemed "generally fair, free, and open" by an international election inspection team, were held. Approximately 65 percent of the populace voted. Although more than forty political parties registered with the election commission, only twenty political parties--mostly small, communist splinter groups--were on the ballot. The Nepali Congress Party won 110 of the 205 seats in the House of Representatives, and the Communist Party of Nepal (United Marxist-Leninist) won 69 seats. Previously operating in exile and behind the scenes, the various communist and other parties and coalitions became a powerful presence in the newly constituted bicameral Parliament. Nepal continued its gradual move toward a multiparty democracy.

Prodemocracy protests continued unabated. Demonstrations were held on February 18, 1992, the second anniversary of the founding of the prodemocracy movement. In early April 1992, rival student groups clashed, and communist and leftist opposition groups called for a general strike as a response to double digit inflation and a more than 60 percent increase in water and electricity tariffs. As a result of skirmishes between the police and demonstrators, a curfew was imposed. In addition, the government banned primary and secondary schoolteachers from political activities and from joining or campaigning for political parties.

Elections to the village development committees and municipalities were held in late May 1992; the elections pitted the various communist factions and other parties against the Nepali Congress Party administration of Prime Minister Girija Prasad (G.P.) Koirala. More than 90,000 civilian and security personnel were assigned to safeguard the elections. In contrast to the May 1991 parliamentary election, the Nepali Congress Party routed the communists in the urban areas and even made some gains in the rural areas. The Nepali Congress Party won 331 positions, or 56 percent of the seats, in the municipalities; the Communist Party of Nepal (United Marxist-Leninist) won 119 seats, or 20 percent of the seats; and other lesser parties won the remainder of the seats. In newly established village development committees, the Nepali Congress Party won 21,461 positions; the Communist Party of Nepal (United Marxist-Leninist) won 11,175 seats.

The Nepalese army has long been intertwined with the monarchy; the 1990 constitution, however, changed the relationship between the military and the king. For the first time, the military no longer was solely an instrument of the king; it was also subordinate to the authority of Parliament. Although under the constitution the king retains his title as the supreme commander of the army, the functional commander in chief is appointed on the recommendation of the prime minister. Although both the king and the government are responsible for implementing national security and military policy, the king's power to declare a state of national emergency and to conduct foreign affairs has national security implications.

Nepal is noted for its famed Gurkha soldiers. Gurkhas served both at home and abroad in the British, Indian, Singapore, and Brunei armies. Their remittances to Nepal were of primary importance to the economy and served as an important source of foreign exchange. By 1997, however, the number of Gurkhas serving in the British army is expected to be reduced from 8,000 to 2,500 persons, and the Gurkha garrison in Hong Kong is scheduled to be withdrawn gradually in the period up to 1995. As of April 1992, a token number of Gurkhas was serving in a United Nations peacekeeping force in the former Yugoslavia.

The difficulty of replacing Nepal's long tradition of autocracy with a democracy, coupled with the economic challenges posed by physical geography and location, was daunting. As of 1992, many of the prescribed changes had only just been instituted, or were still to come. Many observers expected that the populist experiment of a multiparty democracy would meet with eventual failure and that the monarchy and the army would return to some type of power-sharing formula.

Nepal's population, estimated in 1990 as approximately 19.1 million, is very diverse. The country is home to more than a dozen ethnic groups, which originate from three major ethnic divisions: Indo-Nepalese, Tibeto-Nepalese, and indigenous Nepalese. Ethnic identity--distinguished primarily by language and dress--constrains the selection of a spouse, friendships, and career, and is evident in social organization, occupation, and religious observances. Hinduism is the official religion of Nepal, although, in fact, the religion practiced by the majority of Nepalese is a synthesis of Hinduism and Buddhism and the practices have intermingled over time. The socioeconomic ramifications of the country's diversity have proven problematic for Nepal in the late twentieth century.

Considered a least-developed country, Nepal depends heavily on farming, which accounts for most of the country's gross domestic product. The work force is largely unskilled and mostly illiterate. Nepal's industrial base was established in the 1930s, but little process has been made in improving economic performance. In the early 1990s, tourism was one of the largest sources of foreign exchange; visitors from the United States were the most numerous.

Social status in Nepal is measured by economic standing. Landownership is both a measure of status and a source of income. Women occupy a secondary position, particularly in business and the civil service, although the constitution guarantees equality between men and women. Nepalese tribal and communal customs dictate women's lesser role in society, but their status differs from one ethnic group to another and is usually determined by caste.

As of 1992, education was free and compulsory for five years; however males had literacy rates about three times higher than the rates for females and higher school enrollment levels. There were relatively few other social services in the country. The absence of modern medical care, clean drinking water, and adequate sanitation resulted in the prevalence of gastrointestinal diseases. Malnutrition was also a problem, particularly in rural areas. A period of drought in 1992 was expected to cause further food shortages, especially of grain. The country has consistently had high morbidity and death rates.

Economic assistance from other countries, especially India, has been vital to Nepal. Since the 1980s, however, bilateral aid and multilateral assistance programs from countries other than India have been an increasingly important part of development planning. Nepal has received aid from both the United States and communist countries.

In the late twentieth century, Nepal's foreign policy continued to be affected by its geostrategic location between China and India and its attempt to maintain a balance between these powerful neighbors. Nepal's relationship with India is governed by the 1950 Treaty of Peace and Friendship and its accompanying letters, which established an informal military alliance whereby both countries are required to consult and "devise effective countermeasures" in case the security of either is threatened. Since the 1970s, however, Nepal has exhibited greater independence in its foreign policy, establishing bilateral diplomatic relations with other countries and joining various multilateral and regional organizations.

Nepal, for example, belongs to the United Nations and its affiliated agencies such as the Group of 77, as well as the Nonaligned Movement and the Asian Development Bank. It is also a member of the South Asian Association for Regional Cooperation (SAARC), founded in 1983, initially under a slightly different name, as an institutionalized framework for regional cooperation; its permanent secretariat was established in 1987 in Kathmandu. It does not accept compulsory United Nations International Court of Justice jurisdiction.

One of India's longstanding sources of power over Nepal has been India's control of access to raw materials and supply routes. The effect of this control was especially evident during the 1989 trade and transit dispute--and its aftermath--when the foreign trade balance was negatively affected and the economy took a downturn.

In early 1992, Nepal's relations with India were clouded by controversy over the December 1991 agreement for cooperation on a hydroelectric and irrigation project at Tanakpur, near the southwestern Nepalese--Indian border. The Communist Party of Nepal (United Marxist-Leninist) and other leftist parties opposed the project, which they regarded as against Nepal's national interest because the site, on Nepalese territory, was not covered by a formal treaty. The constitution stipulates that treaties need parliamentary assent if exploitation of the nation's natural resources is involved. Prime Minister G.P. Koirala said he had signed a memorandum of understanding, not a treaty. The opposition took their case to the Supreme Court.

Military relations between Kathmandu and New Delhi were cordial. In March 1992, the Indian chief of army staff visited Nepal and was made an honorary general of the Royal Nepal Army, an uncommon occurrence.

Nepal's relations with China were low-key and an exercise in caution. Nonetheless, India interpreted sales of air defense weapons by China to Nepal in 1988 as interfering with its treaty arrangements with Nepal. Nepal and China, however, signed technical and economic cooperation agreements in March 1992.

Bhutan has its own distinct history, although it shares Nepal's Himalayan geography and neighbors (see fig. 2). Only one-third the size of Nepal, Bhutan also has a much smaller population: estimated at about 600,000 persons in 1990 as compared to a population of over 19 million in Nepal.

The precursor of Bhutan, the state of Lhomon or Monyul, was said to have existed between 500 B.C. and 600 A.D. At the end of that period, Buddhism was introduced into the country; a branch of Mahayana Buddhism is the state religion of Bhutan. Bhutan was subject to both Indian and Tibetan influences, and small independent monarchies began to develop in the country by the early ninth century. Religious rivalry among various Buddhist subsects also influenced political development; the rivalry began in the tenth century and continued through the seventeenth century, when a theocratic government independent of Tibetan political influence united the country. From that time until 1907, the Kingdom of Bhutan, or Drukyul (literally land of the Thunder Dragon), had a dual system of shared civil and spiritual (Buddhist) rule. In 1907 the absolute monarchy was established, and the hereditary position of Druk Gyalpo, or Dragon King, was awarded to the powerful Wangchuck family. Since 1972, Jigme Singye Wangchuck has held the position of Druk Gyalpo.

The Druk Gyalpo controls the executive, legislative, and judicial branches of the government. The monarchy is absolute, but the king is admired and respected and is referred to by the people as "our King." The Council of Ministers and Royal Advisory Council are part of the executive branch of government. The legislative branch is made up of the unicameral National Assembly, or Tshogdu, whose members are either indirectly elected or appointed by the Druk Gyalpo. Bhutan has neither a written constitution nor organic laws. The 1953 royal decree on the Constitution of the National Assembly is the primary legal, or constitutional, basis for that body and sets forth its rules and procedures. The Supreme Court of Appeal, in effect the Druk Gyalpo, is the highest level court; judges are appointed by the Druk Gyalpo. There are no lawyers. The civil code and criminal code are based on seventeenth-century concepts.

Under Jigme Singye Wangchuck, Bhutan's centrally controlled government system has been instrumental in initiating greater political participation. In the early 1990s, however, there were still no legal political parties--although there were elite political factions--and no national elections. There was no overt communist presence. Each family was allowed one vote in village- level elections. Local government was divided into zones, districts, subdistricts, and village groups, and meetings were regularly held at the village and block (gewog) levels, where issues were decided by public debate. The complex administrative network of consultation and decisionmaking by consensus obscured the need for national elections. At the 1992 session of the National Assembly, support for the hereditary monarchy was unanimously reaffirmed.

Like Nepal, Bhutan has a diverse population. It is home to four ethnic groups: Ngalop--of Tibetan origin; Sharchop--of Indo- Mongoloid origin; aboriginal, or indigenous, tribal peoples; and Nepalese. In the early 1990s, the first three groups made up about 72 percent of the population. According to this estimate, the Nepalese comprised approximately 28 percent of the population; other estimates suggested that 30 to 40 percent might be Nepalese. The Nepalese constituted a majority in southern Bhutan, where, in an effort to maintain traditional culture and control, the government has tried to confine their immigration and restrict their residence and employment. In the early 1990s, only approximately 15 percent of the Nepalese in Bhutan were considered legal permanent residents; only those immigrants who had resided in Bhutan for fifteen or twenty years--the number of years depended on their occupational status and other criteria--were considered for citizenship. Nepalese immigrants who were asked to leave because their claims to citizenship did not conform to the 1985 Citizenship Act openly voiced their discontent with the government. Illegal immigrants often were militant antinationals.

In the 1980s, the Bhutanese, believing their identity threatened by absorption of a growing Nepalese minority and the specter of annexation by India, promulgated a policy of driglam namzha, "national customs and etiquette." This policy, sought to preserve and enhance Bhutanese cultural identity and bolster Bhutanese nationalism. The policy mandated the wearing of national dress for formal occasions and the use of the official language, Dzongkha, in schools. In 1989, it was decreed that Nepali, which had been offered as an optional language, was no longer to be taught in the schools. Subsequent government decrees contributed to a growing conflict with ethnic Nepalese, who sought to maintain their own identity and viewed these edicts as restrictive. Ethnic strife increased as the aftereffects of Nepal's prodemocracy movement spread to Bhutan, where Nepalese communities demonstrated against the government in an effort to protect their rights from the driglam namzha policy. Expatriate Nepalese political groups in Nepal and India supported these antigovernment activities, further alienating the Bhutanese.

Bhutan's military force, the Royal Bhutan Army, is very small; in 1990 it numbered only 6,000 persons. The Druk Gyalpo is the supreme commander of the army, but daily operations are the responsibility of the chief operations officer. The army's primary mission is border defense although it also assists the Royal Bhutan Police in internal security matters.

Bhutan, like Nepal, is considered a least-developed country. Its work force is largely unskilled, and a wide gap exists between the rich and the poor. Farming is the mainstay of the economy and accounts for most of the gross domestic product. Although Bhutan did not begin to establish its industrial base until the 1950s, careful economic planning and use of foreign aid have resulted in measurable improvements in economic efficiency and performance over the last four decades. As is the case in Nepal, tourists bring in a major portion of the country's foreign exchange.

Social status in Bhutan, as in Nepal, depends primarily on economic standing in the community. Specifically, it depends on landownership, occupation, and perceived religious authority. The society is male dominated. Although as of 1992 the government officially encouraged increased participation of women in political and administrative life, women remained in a secondary position, particularly in business and the civil service. Bhutanese women, however, do have a dominant social position, and land often passes to daughters, not to sons. Bhutan's traditional society is both matriarchal and patriarchal; the head of the family is the member in highest esteem. However, men predominate in government and have more opportunities for higher education than do women.

As of 1992, education in Bhutan is free for eleven years but not compulsory. Men have literacy rates about three times higher than those for women, and school enrollment levels are higher for males. As is the case in Nepal, social services are not widespread. Modern medical care is lacking, as is clean drinking water and adequate sanitation. Not surprisingly, gastrointestinal diseases are widespread. Nutrional deficiencies are also prevalent; serious malnutrition, however, does not appear to be a problem. Like Nepal, the country had high morbidity and death rates in the early 1990s.

Foreign aid, grants, and concessionary loans constituted a large percentage of Bhutan's budget in the early 1990s. Like Nepal, Bhutan received foreign assistance from the United Nations, the Colombo Plan (see Glossary), the Asian Development Bank, the World Bank (see Glossary), and the Organization of Petroleum Exporting Countries, as well as official development assistance and other official flows. Because Bhutan had no formal diplomatic relations with the United States as of 1992, no official aid was forthcoming from Washington.

As has been the case in Nepal, Bhutan's foreign policy has been affected by its geostrategic location. From the seventh century until 1860, the country's foreign policy was influenced by Tibet; next followed a period of British guidance over foreign affairs. After India received independence from Britain in 1947, Bhutan came under India's influence. Thimphu and New Delhi's relationship is governed by the 1949 Treaty of Friendship between the Government of India and the Government of Bhutan--in force in perpetuity--which calls for peace and noninterference in internal affairs and New Delhi's guidance and advice in external relations. Like Nepal, however, Bhutan is exhibiting greater independence in its foreign policy, and by the early 1990s was, in effect, autonomous in its foreign relations. Thimphu has established bilateral diplomatic relations with other countries and has joined various multilateral and regional organizations. Bhutan belongs to the United Nations, as well as to organizations such as SAARC, the Nonaligned Movement, and the Asian Development Bank. It does not accept compulsory United Nations International Court of Justice jurisdiction.

Both Nepal and Bhutan were facing refugee problems in the early 1990s; statistics on the number of refugees come from diverse sources and are discrepant. In April 1992, the United Nations High Commissioner for Refugees estimated that since 1986 more than 30,000 ethnic Nepalese had left Bhutan because of political discontent, poor employment prospects, or because they were considered illegal immigrants. A much higher figure is projected by G.P. Koirala, Nepal's prime minister, who has estimated that in the early 1990s Nepalese from Bhutan seeking to escape the sanctions imposed by driglam namzha arrived in Nepal at the rate of 200 persons daily.

Antinationals in Bhutan used the growing number of southern Bhutanese-Nepalese in the refugee camps within Nepal as a means to publicize and internationalize their plight. To this end, they encouraged Nepalese to leave Bhutan and also encouraged Nepalese from India to enter the camps. For Bhutan, the departure of the Nepalese often meant the loss of skilled laborers; however, it also resulted in the exodus of unwanted agitators. For Nepal, the refugees were an added economic burden--more people needing housing, food, clothing, education, and other social services. Living conditions in the refugee camps within Nepal were reported to be poor. As of mid-1992, the camps were filled with people holding Nepalese citizenship cards, Bhutanese citizenship cards, and UNHCR certificates attesting they were "Bhutanese refugees." However, because each party seeks to present its own case, all statistics and statements related to the Nepalese refugee situation must be viewed cautiously.

The refugee problem presented a challenge to India, which needed to balance its interests in maintaining Bhutan's stability with the necessity of not inflaming nationalist passions among its own ethnic Nepalese population and not upsetting its relations with either Nepal or Bhutan. India would not allow its territory to be used as a staging ground for protests by Bhutanese residents of Nepalese origin. The situation was further complicated by the fact that Indian laborers who entered Nepal in search of work displaced underemployed and unemployed Nepalese workers.

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September 10, 1992

Since the introduction was written, the events of late 1992 and early 1993 in Nepal and Bhutan have been a continuum of the past few years. The refugee issue has continued to be problematic. The leaders of both Nepal and Bhutan met with India's leaders in late 1992 and early 1993; all the parties reaffirmed that the issue was an internal matter that should be resolved through bilateral talks between Nepal and Bhutan. In spite of the agitation and activities of antinationals in the south, Bhutan's National Assembly passed a National Security Act in late 1992 that abolished the death penalty for crimes of treason as stipulated in a 1957 law, providing instead for life imprisonment.

In December 1992, the Supreme Court of Nepal ruled against Prime Minister G.P. Koirala's signing of a December 1991 accord for hydroelectric power cooperation with India at Tanakpur. After their victory, Koirala's opponents in the Nepal Communist Party (United Marxist-Leninist) pressed him to step down--he refused. As a result of the court's decision, however, Kathmandu said the Koirala government would present the Tanakpur accord and its relevant documents to the next parliamentary session for ratification--a step that would have otherwise been bypassed.

Nepal also passed laws in December 1992 to encourage foreign (and local) investment by creating a more favorable investment environment. Foreigners will be allowed to repatriate earnings and hold total equity in new projects.

March 3, 1993
Andrea Matles Savada

Data as of September 1991