U.S. DEPARTMENT OF STATE
BACKGROUND NOTE:  NEPAL 
JANUARY 1995

Official Name:  Kingdom of Nepal 


PROFILE 

Geography

Area:  147,181 sq. km. (56,136 sq. mi.); about the size and shape of 
Tennessee, bordering China and India.  
Cities:  Capital--Kathmandu (pop. 600,000).  

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--Nepalese (sing. and pl.).  Adjective--Nepalese or 
Nepali.  
Population (1993 est.):  19 million.  
Annual growth rate:  2.5%.  
Ethnic groups (caste and ethnicity are often used interchangeably):  
Brahman, Chetri, Newar, Gurung, Magar, Tamang, Rai, Limbu, Sherpa, 
Tharu, and others.  
Religions:  Hinduism (86.2%), Buddhism (7.8%), Islam (3.8%) and others 
(2.2%).  Languages:  Nepali and more than 
12 others.  
Education:  Years compulsory--0.  Attendance--primary 81%, secondary 
30%.  Literacy--38% (52% male, 18% female).  
Health:  Infant mortality rate--102/1,000.  Life expectancy--54 yrs. 
(male), 52 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):  United Marxist-Leninist 
(Communist Party of Nepal), Nepali Congress Party, National Democratic 
Party, others.  
Elections:  At least every five years. 
Suffrage:  Universal over 18.    
Central government budget (1994): $854 million.    
Defense/Police (1994):  $114 million
National Day:  Democracy Day, 
Falgun 7 (mid-February).    
Flag:  Two blue-edged red triangles pointing away from staff, with 
symbols of the sun and moon in white. 

Economy

GDP (1994-est.):  $4.1 billion.
Annual growth rate:  6%. 
Per capita income:  $200.  
Avg. inflation rate (1993-94):  9.6%.     
Natural resources:  Water, hydropower, scenic beauty, limited but 
fertile 
agricultural land, timber.    
Agriculture (42% 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 (1994-est. ):  Exports--$460 million: carpets, garments.  Major 
markets--Germany, U.S.  Imports--$1.3 million: manufactured goods.  
Major supplier--India.    
Official exchange rate (December 1994): 
49 Nepalese rupees=US$1.00.  
Fiscal Year:  July 16-July 15.   n

PEOPLE

Perched  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 90% Hindu, the official state 
religion.  Hinduism, however, has synthesized with Buddhism in Nepal.  
As a result, 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

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 Nepalese 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 quasi-constitutional 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 largest opposition, the United Marxist and 
Leninist Party (UML), won 69 seats.  Girija Prasad Koirala became prime 
minister and formed the government.  In May/June of 1992 the structure 
of Nepal's new democratic government was completed following local 
elections in which the Nepali Congress Party scored a convincing 
victory.

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 
has made Nepal the world's first Communist monarchy.  The politically-
moderate UML also was a champion of multiparty democracy during the 
years of struggle, and has supported the country's free-market reforms.  
Man Mohan Adhikary, 72, the president of the Communist Party who spent 
17 years in prison for fighting to restore democracy, is the new prime 
minister.  

The Communist Party formed a minority government in December 
1994.  The new Government's major policy statements call for continued, 
if somewhat slower, economic liberalization and privatization of state 
enterprises, land reform, and the establishment of a Human Rights 
Commission.

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.  

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 the two state-owned newspapers. Views expressed since the 1990 
move to democracy are extremely varied and vigorous.  Radio and 
television media remain state owned and normally follow the views of the 
government.  The law strictly forbids the media to criticize or satirize 
the king or any member of the royal family.

Principal Government Officials

King--Birendra Bir Bikram Shah Devi
Queen--Aishwarya Rajya Laxmi Devi Shah

Cabinet Ministers--
Prime Minister, Royal Palace Affairs--Man Mohan Adhikary 
Deputy Prime Minister, Foreign Affairs and Defense--Madhav Kumar Nepal
Home Affairs--Khadga Prasad Sharma Oli 
Finance--Bharat Mohan Adhikary
Local Development and Supply--Chandra Prakash Mainali
Agriculture, Land Reforms and  
Management--Radha Krishna 

Mainali
Education, Culture and Social Welfare--Modnath Prashit
Information and Communications--Pradip Kumar Nepal
Labour and Health--Padma Ratna Tuladhar

Ambassador to the United States--Pradeep Khatiwada, Charge d'Affairs
Ambassador to the United Nations--Vacant   


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 under $200.  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 has completed seven economic development plans and began its 
eighth in 1991; its currency was recently made convertible, and a number 
of state enterprises have been earmarked for privatization.  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  
81% of the population and providing almost half of the country's income.  
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 have 
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.  A system of internal finance and public administration has 
been established.  The export-oriented carpet and garment industries 
have grown rapidly in recent years and together now account for some 80% 
of merchandise exports.    

Nepal's merchandise trade balance has improved somewhat in recent 
years with the growth of the carpet and garment industries.  The trade 
deficit steadily rose in the early 1990s, fueled by the results of trade 
disputes with India and erratic monsoons.  Despite a rapid increase in 
manufactured exports during the past five years, particularly carpets 
and garments, imports have increased even faster and trade deficit has 
accordingly climbed from $432 million in 1992 to $687 million in 1993 
and may reach $840 million in 1994.  The annual monsoon rain or lack of 
it strongly influences economic growth.  Real GDP growth fell from 6% in 
1990 to 3% in 1992 and 1993 before recovering to 8% in 1994.

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, and 
Germany.  Several multilateral organizations, such as the World Bank, 
the Asian Development Bank, and the UN Development Program also provide 
assistance.  By 1994, Nepal had foreign exchange reserves equal to eight 
months of imports. 

Progress has been made in exploiting Nepal's major economic 
resources--tourism and hydroelectricity.  With eight of the world's ten 
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,  have been completed; still 
others are planned.

The environmental impact of Nepal's hydroelectric projects (HEP) has 
been limited by the fact that most are "run-of-river" with no water 
storage.  The largest under active consideration is the controversial 
Arun III 201 megawatt project.  A national electricity grid is in place 
and consumption is increasing at 15% to 20% a year.

Population pressure on natural resources is increasing.  At current 
rates of growth, Nepal's population will reach 20-22 million by the turn 
of the century.  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 35,000 troops organized 
into a royal guards brigade, seven infantry brigades, a special forces 
unit, an air wing, four support brigades (logistics, engineer, signal, 
and artillery), and 44 independent infantry companies.  Training 
assistance is provided by India, Pakistan, Bangladesh, and the United 
Kingdom.  U.S. training assistance is provided via an annual $100,000 
International Military Education and Training Program (IMET) grant. 

The Royal Nepalese Army has served with distinction in numerous UN 
peacekeeping missions and currently has contingents deployed with the UN 
Interim Force in Lebanon (UNIFIL), the UN Protective Force (UNPROFOR), 
and in Somalia with UNOSOM II.  Nepalese troops have fought in the 
British army since 1814 and for the Indian army since 1947, which 
inherited some of the British army's regiments at independence.  
Agreements allowing the British and Indians to recruit in Nepal still 
exist.

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 
often use indiscriminate force in quelling leftist-inspired protests. In 
addition, there have been reports of torture under detention and 
widespread reports of custodial abuse.  The Government's unwillingness 
to investigate or enforce accountability for recent and past abuses 
remains a concern.  

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 closer than with China.  
India and Nepal restored trade relations in 1990, after a break caused 
by India's security concerns over Nepal's relations with China.  The two 
countries have since undertaken renegotiations regarding trade and 
transit terms.    

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 non-aligned policy and often votes with the Non-aligned 
Movement in the United Nations.  The country also  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.-NEPALESE  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 the alleviation of 
poverty.   

The United States has provided more than $500 million in bilateral 
economic assistance to Nepal since 1951.  In recent years, annual 
bilateral U.S. economic assistance through the Agency for International 
Development (AID) has averaged $15 million.  AID supports agriculture, 
health, family planning, environmental, democratization, and economic 
liberalization efforts in Nepal.  The United States also contributes to 
international institutions and private voluntary organizations working 
in Nepal.  Multilateral contributions to date approagh an additional 
$500 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 140 Peace Corps volunteers work in Nepal. 
Principal U.S. Officials

Ambassador--Sandy Vogelgesang
Deputy Chief of Mission--Peter Bodde 
Counselor for Administrative Affairs--William Campbell
AID Director--Frederick Machmer
Peace Corps Director--Donovan  Russell 
Political and Economic Officer--Peter S. Gadzinski 
Economic and Commercial Officer--Craig Arness
Consular Officer--Rehka Arness 
Public Affairs Officer--David A. Queen 

The U.S. embassy in Nepal is located in Pani Pokhari, Kathmandu (tel: 
[977] 
(1) 411179. Fax:  [977] (1) 419963). The U.S. Agency for International 
Development is located at the embassy (tel: [977] (1) 411179.  Fax:  
[977] 
(1) 272357. 

FURTHER INFORMATION

Most of the following information resources are available free at public 
and Federal depository libraries in the United States or for a fee from 
the Superintendent of Documents, U.S. Government Printing Office, P.O. 
Box 37194, Pittsburgh, PA 15250-7954.  To order, call (202) 512-1800 or 
fax: (202) 512-2250.  

U.S. Department of State.  U.S. Department of State Dispatch.  
Weekly magazine. 

U.S. Department of State.  Department of State Foreign Affairs Network 
(DOSFAN).  A new service on the Internet providing timely, global access 
to official U.S. foreign policy information.  Updated daily.  Accessible 
three ways:

Gopher:  dosfan.lib.uic.edu 
URL:  gopher://dosfan.lib.uic.edu/
WWW:  http://dosfan.lib.uic.edu/dosfan.html.

U.S. Department of State.  U.S. Foreign Affairs on CD-ROM, 1990-1994.  
New quarterly foreign policy library with more than 4,000 official 
documents and publications.  

U.S. Department of State. Consular Affairs Bulletin Board--a free 
electronic bulletin board service, available by modem:  (202) 647-9225.   

American University.  Area Handbook for Nepal, Bhutan, and Sikkim.

U.S. Embassy of Nepal.  Doing Business in Nepal, December 1994.  
Available directly from the Bureau of South Asian Affairs (SA/INS), U.S. 
Department of State (tel. (202) 647-2351) and from the U.S. Embassy in 
Kathmandu at Pani Pokhari, Kathmandu (tel: [977] (1) 411179.  Fax:  
[977] (1) 419963).

International Trade Administration.  "Nepal."  Country Commercial 
Guides.  Annual.  Also available from the U.S. Department of Commerce.
U.S. Department of State.  Key Officers of Foreign Service Posts: Guide 
for Business Representatives.  Biannual. U.S. Department of Commerce:  
National Trade Data Bank on the Internet (gopher.stat-usa.gov) and on 
CD-ROM.  Call the NTDB Help-Line at (202)482-1986 for more information.  

(BOX)

Travel Information:  

The U.S. Department of State's Consular Information Program provides a 
variety of timely information of interest to travelers, 
including Travel Warnings and Consular Information Sheets on all the 
countries of the world plus helpful advice on enjoying your trip abroad.  
The can be obtained at no cost by telephone at (202) 647-5225 or by fax 
at (202) 647-3000.  Travel information is also on-line:  access the 
Consular Affairs Bulletin Board  at (202) 647-9225, by modem with 
standard settings.  

Travel Warnings are issued when the Department recommends that 
Americans avoid travel to a certain country.  Information Sheets exist 
for all countries and cover immigration practices, currency regulations, 
health conditions, areas of instability, crime and security information, 
political disturbances, and the addresses of the U.S. embassies and 
consulates in the country.

Health Information:  Travelers can check the latest information on 
health requirements and conditions in a country with the U.S. Centers 
for Disease Control and Prevention in Atlanta, Georgia. Call the Hotline 
at (404) 332-4559 for telephonic or fax information on the most recent 
health advisories, immunization recommendations or requirements, and 
other advice concerning your destination.  No immunizations are required 
for entry to Nepal. Gamma globulin is recommended for all areas.  
Malaria suppressants are recommended for areas below 4,000 ft. in 
altitude.  

Protection against polio, typhus, and meningitis is suggested.
Tourism:  Contact your travel agent or the Embassy of Nepal at 2131 
Leroy Place, NW, Washington, DC 20008 (tel. 202-667-4550) for further 
information.  (###)

Published by the United States Department of State -- Bureau of Public 
Affairs in conjunction with the Bureau of South Asian Affairs -- Office 
of  Public Communication -- Washington, DC --January 1995--Managing 
Editor:  Peter Knecht.  Editor:  Deborah Guido-O'Grady.

Background Notes Series.  This material is in the public domain and may 
be reprinted without permision; citation of this source is appreciated. 

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