Updated March 1, 2023
Nepal
Overview
Himalayas will be lost by 2100 if global climate mitigation
The Federal Democratic Republic of Nepal is a poor,
targets are not met. Rising temperatures, shifting rainfall,
relatively small, landlocked state situated between China
and India. Since restoring parliamentary democracy in
Figure 1. Nepal in Brief
2006, Nepal has faced significant political instability, and
tensions between neighbors India and the People’s Republic
of China (PRC or China) largely define the context of its
foreign policy. Congressional interest in Nepal has focused
on oversight of U.S. assistance, including a Millennium
Challenge Corporation (MCC) Compact, and Tibetan
refugees, among other issues.
Background
Nepal is a country of approximately 30 million people that
has undergone significant political transformation since
2006, when a 10-year armed insurgency by Maoist militants
ended after claiming at least 13,000 lives. In 2006, Nepal’s
king ended direct monarchical rule and reinstated the
country’s parliament in response to weeks of protests. After
the Maoists’ electoral success in 2008, Nepal declared itself
a republic, and a Constituent Assembly (CA) was directed
to write a new constitution. A subsequent CA elected in
2013 agreed to a new constitution in 2015. Nepal now has a
bicameral legislature with 275 Members in the House of

Representatives and 59 Members in the National Assembly,
and drought are having an impact on Nepalis engaged in
the body’s upper house. The Prime Minister serves as the
agriculture. Some reports project that climate change will
head of government, and the indirectly-elected President
lead to the geographic spread of disease in Nepal. President
serves a largely ceremonial role. Though the process of
Bidhya Devi Bhandari has stated that “We have been
democratization has not been smooth, Nepal’s government
bearing the brunt of disproportionate impacts of climate
has brought former insurgents into the political system and
change despite being a low carbon-emitting country.”
conducted peaceful elections.
U.S. Relations and Assistance
Ethnic, religious, and caste identities are important for
Observers view Washington’s recently renewed focus on
many in Nepal, where approximately 81% of citizens are
Nepal as being motivated by Beijing’s growing influence in
Hindu and 9% are Buddhist. Nepali is the official language,
Kathmandu. U.S. policy toward Nepal has sought to assist
though many regional and indigenous languages are also
Nepal’s development as a peaceful, prosperous, and
spoken. The three main geographic areas of the country
democratic nation that contributes to regional stability. U.S.
include the low-lying and agriculturally productive Terai
assistance programs have focused on agriculture,
region, which borders India, an intermediate central hill
democracy, human rights, good governance, education, the
zone, and more mountainous parts of the country. Never
environment, climate change, gender equality, and global
colonized, Nepal was largely isolated until the early 1950s,
health. In January 2023, U.S. Undersecretary for Political
and its difficult physical environment presents challenges
Affairs Victoria Nuland announced that the United States
for development. In 2015, a 7.8 magnitude earthquake near
would invest over $1 billion in Nepal over the next five
Kathmandu killed nearly 9,000 people.
years. The MCC Compact with Nepal, signed in 2017,
includes $500 million to “spur economic growth and reduce
Climate Change
poverty in Nepal” and has a significant electricity
Nepal is particularly vulnerable to rising risks brought on
transmission component. The Compact was ratified by
by climate change. According to the 2021 World Bank
Nepal’s parliament in February 2022. A bilateral Trade and
Climate Risk Country Profile, “warming in Nepal is
Investment Framework Agreement entered into force in
projected to be higher than the global average [and] climate
2011.
change is already having significant impacts. Natural
hazards such as drought, heatwave, river flooding, and
Recent Political Developments
glacial lake outburst flooding are all projected to intensify.”
Shifting alliances among Nepal’s political elite continue to
Recent studies indicate that two-thirds of glacier ice in the
prevent a stable government from taking hold in Nepal. At
the close of 2022, Nepal had seen 13 different governments
https://crsreports.congress.gov

---

Nepal
in 16 years. A coalition led by Prime Minister Pushpa
map including the Lipulekh, Kalapani, and Limpiyadhura
Kamal Dahal (2008-2009, 2016-2017, and 2022-present) of
regions as its territory, exacerbating a decades-long border
the Communist Party of Nepal Maoist-Centre (CPN MC)
dispute.
replaced former Prime Minister Sher Bahadur Deuba’s
(1995-1997, 2001-2002, 2004-2005, 2017-2018, and 2021-
China has made significant inroads in developing ties with
2022) Nepali Congress (NC)-led government following
Nepal since India’s 2015 blockade. China and Nepal held
elections in November 2022. (Dahal, who led the Maoists
their first-ever joint military exercises in April 2017, and
during the insurgency, is also known by the nom de guerre
the next month signed a Memorandum of Understanding
Prachanda.) The coalition government included the
(MoU) on China’s Belt and Road Initiative. Beijing has
Communist Party of Nepal Marxist Leninist (CPN UML)
pledged to invest significantly in Nepali road and
led by Party Chairman and former Prime Minister Khadga
hydropower projects. Reports indicate that plans for a rail
Prasad Sharma Oli (2015-2016 and 2018-2021). On
project linking China and Nepal costing over $8 billion may
February 27, 2023, it was reported that Oli’s CPN-UML
move forward for approval in 2023. In February 2022, a
withdrew its support from the Dahal-led government. Oli
Nepalese government report on alleged PRC encroachment
appears to have withdrawn support over Dahal’s decision to
into Nepal’s Humla district was leaked to the press.
support a NC candidate for president. The presidential
According to the BBC, the report found that PRC security
election is scheduled for March 9, 2023. The next
forces had restricted religious activities in the district,
parliamentary election is due in 2027.
limited grazing by Nepalese farmers, and constructed
fencing as well as a canal and road on the Nepal side of the
Nepal’s Relations with India and China
shared border.
In geopolitical terms, Nepal is typically viewed as a buffer
state between India and China. Nepal’s ties with India
Human Rights, Trafficking, and Migrant
historically have been closer than its ties with China,
Workers
largely due to geography and shared religious and cultural
The State Department’s 2021 Country Reports on Human
traditions. India and Nepal are the world’s only two Hindu-
Rights Practices: Nepal found reports of “unlawful or
majority nations. Under former Prime Minister Oli, Nepal
arbitrary killings, including extrajudicial killings by the
expanded ties with China as it sought to reduce its reliance
government; torture and cases of cruel, inhuman or
on India. Observers viewed the change of leadership from
degrading treatment by the government; arbitrary detention;
Oli to Prime Minister Deuba as a positive step for Nepal-
serious restrictions on free expression, [and] … restrictions
India relations. Though he is viewed as pragmatic, Prime
on freedom of movement for refugees, notably resident
Minister Dahal’s return to office may improve Nepal’s ties
Tibetans; [and] serious government corruption.” The
with China. India and China continue to seek more
Department’s Trafficking in Persons 2022 report found that
diplomatic and economic engagement with Nepal to protect
Nepal, a “Tier 2” country, “does not fully meet the
their perceived interests and to deepen ties. While the
minimum standards for the elimination of trafficking but is
Himalayan Mountains along Nepal’s northern border have
making significant efforts to do so.” Thousands of women
historically limited interactions with China, the southern
and girls are reportedly trafficked to India each year. Nepal
plains border with India is relatively open.
also has the world’s third-highest rate of child marriage,
with an estimated 37% of girls marrying before age 18.
India and Nepal have had a tradition of close coordination
Remittances accounted for 22% of GDP in 2022. Many of
on issues of defense and foreign affairs, based on the 1950
those working abroad labor under harsh conditions and
India-Nepal Treaty of Peace and Friendship. Nepal depends
some are subject to abuse and exploitation.
on India as its primary source of imports and as its main
export market, and for sea access through the Indian port of
Congressional Interest
Kolkata. A large number of Nepalese Gurkha troops have
Congressional interest in Nepal has included supporting
served in the Indian Army. Nepal-India relations cooled
democratic institutions, promoting regional stability,
after India unofficially blockaded Nepal in 2015 in response
alleviating poverty, promoting human rights and sustainable
to Nepal’s adoption of a constitution that India asserted did
economic growth, and the interests of Tibetan refugees, as
not adequately protect the interests of ethnic Madhese, who
well as helping build resilience to deal with climate change
have close ties to India. Former Prime Minister Oli
and natural disasters. A Congressional Caucus on Nepal
criticized New Delhi’s decision to become involved in
was formed in 2011. Some Members of Congress have
Nepal’s domestic debate and its imposition of the blockade,
supported programs to promote and preserve Tibetan
and signed a trade and transit agreement with China in 2016
culture and language in the refugee and diaspora Tibetan
in an effort to end India’s monopoly over trade with Nepal.
communities in Nepal and to assist in the education and
development of the next generation of Tibetan leaders.
Indian Prime Minister Narendra Modi has sought to mend
Thousands of Tibetans fled to India and Nepal following
ties and restore India’s influence with Nepal. Modi sought
China’s annexation of Tibet in the 1950s. Approximately
to address boundary issues and proposed cooperation on
12,500 Tibetans, out of Nepal’s total population of 30
hydropower, and regional connectivity during his May 2022
million, are estimated to reside in Nepal.
visit to Nepal, and had previously proposed initiatives in
agriculture, inland waterways and railways that would
Bruce Vaughn, Specialist in Asian Affairs
increase connectivity between both countries. Tensions
between India and Nepal rose in 2020 after Nepal issued a
IF10216
https://crsreports.congress.gov

---

Nepal


Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.

https://crsreports.congress.gov | IF10216 · VERSION 13 · UPDATED

---