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COUNTRY PROFILES


PROFILE

Country Profile

Area: Approximately 147,000 sq km, stretching 800km from east to west and from 90 to 230km north to south.
Population: 29 million (World Bank).
Capital city: Kathmandu. Population of about 990,000 in the city itself. Believed to be approximately 1.8m in the fertile Kathmandu Valley. (from World Gazetteer 2010)
Peoples: Indigenous peoples include Gurung, Limbu, Newar, Rai, Sherpa, Tamang and Tharu with diverse smaller groups. Major caste groups are the Brahmins and Chhetris. Large numbers of Indians and some Tibetans make their home in the country.
Language(s): Nepali 58% (official language), Newari 3%, mainly in Kathmandu. Tibeto- Burman languages (20%) mainly in the hill areas, and Indian-related languages (20%) mainly in the Terai areas bordering India. Nepal has over 30 Languages and over a hundred dialects.
Religion(s): Officially 90% Hindu, 8% Buddhist and 4% Muslim – but accurate figures are not available. Hinduism and Buddhism overlap considerably in Nepal. Estimates suggest that there are some 400,000 Christians in the country.
Currency: Nepalese Rupee (NPR) which is pegged to the Indian Rupee.
Major political parties: Unified Communist Party of Nepal – Maoist (Chairman – Pushpa Kamal Dahal AKA ‘Prachanda’), Nepali Congress (President - Sushil Koirala), Communist Party of Nepal-Unified Marxist-Leninist (CPN-UML) (Chairman - Jhalanath Khanal), Madhesi People's Rights Forum-Democratic (MJF-D) (Chairman – Bijay Gachchhadar)
Government: Nepal is a parliamentary democracy with a largely ceremonial President as Head of State and a Prime Minister as Head of Government. The Prime Minister currently leads a coalition government. Elections for a 601-seat Constituent Assembly cum legislature were held on 10 April 2008. General elections will be held when a new constitution has been promulgated.
Head of State: President Dr Ram Baran Yadav (Nepali Congress)
Prime Minister: Dr Baburam Bhattarai (UCPN-Maoist)
Minister for Foreign Affairs: Narayan Kaji Shrestha (and Deputy Prime Minister)
Membership of international groupings/organisations: United Nations, South Asian Association for Regional Co-operation (SAARC), Council of Democracies.

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ECONOMY

GDP: US$15.1 billion (2011 IMF)
GDP per head: US$536 (2011 IMF)Annual growth: 3% in 2010 estimate (IMF) )
Inflation: 10.5% estimate 2011 (IMF)
Major industries: Tourism; carpets, textiles and handicrafts; small rice, jute, sugar and oilseed mills; cigarettes; cement and brick production.
Major trading partners: India 64%, EU 27 11%, US 7%, Bangladesh 7%, China 3% (WTO)

Nepal is one of the poorest countries in Asia with over half the population surviving on less than $1.25 a day and the fifteenth poorest in the world. In 2006 the tourism industry was opened up to foreign investors. Nepal attracts over 500,000 tourists every year, with around twenty foreign airlines now flying to Nepal. A survey by the Asian Development Bank found that 76% of companies identified electricity supply a key constraint to business Nepal's power shortage is severe with seasonal outages of up to 16 hours a day.

The economy is dominated by agriculture and remittances from Nepalis working overseas, each of which account for around a third of GDP. Remittances are crucial to Nepal’s economy, and bring in more foreign exchange than exports. Tourism accounts for around 7% of GDP.

The global financial crisis had a delayed effect on Nepal, as growth in remittances slowed and exports declined fell in 2010. Funding from the IMF increased boosted confidence in the currency peg and the economy as a whole, preventing capital flight. The banking sector remains vulnerable as the rapid growth in credit has strained the Central Bank’s supervisory capacity. Asset prices have boomed in recent years, particularly in real estate.

The UK’s trade with Nepal has not grown significantly in recent years. Nepal enjoys tariff-free access to the EU market under the ‘Everything But Arms’ regulation, but goods exports to the UK still only represent a small share of total Nepalese exports (around 2% in 2009).

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HISTORY

The five city-states of the Kathmandu Valley, in which the culture of the Malla Kings flourished from the 14th to the 17th centuries, were conquered by the ruler of the central hill state of Gorkha in the mid 18th century. Prithvi Narayan Shah is looked upon as founder of the nation. Further expansion by the Shahs in the early 19th century brought them into conflict with British India. Following the Anglo-Nepal war of 1816 the Treaty of Sugauli was signed. A permanent British Resident was posted to Kathmandu in 1816, with the British remaining the only foreign diplomatic presence in the capital for well over a century. In 1846 the Shah dynasty were deprived of executive rule by Jung Bahadur Rana, who established a line of hereditary Prime Ministers which ruled until 1951 when King Tribhuvan in a 'Palace revolution' re-established the Shahs as rulers of the country, followed by a series of more representative cabinets and the first democratic elections. However, in 1960 King Mahendra assumed direct rule and drew up a new Constitution based on the 'partyless' Panchayat (five-man village council) system. Political parties were banned and suppressed, at times violently.

In early 1990, during King Birendra's reign, following widespread agitation for a multi-party democracy, Nepal experienced a virtually bloodless 'revolution' and a new Constitution was promulgated in November of that year which retained the constitutional Monarchy as Head of State but introduced a full parliamentary system of government. The Nepali Congress party formed a government which ruled from 1991-94. From 1994-1999 there were five successive coalition governments.

It was against this unstable political background that 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. Over 16,000 civilians, insurgents, police, and soldiers were killed in the conflict and around 1,500 people were 'disappeared'.

King Gyanendra, came to the throne in June 2001 following the ‘Palace Massacre’ in which King Birendra and much of his family died. After Sher Bahadur Deuba was appointed Prime Minister on 22 July 2001 he announced a unilateral ceasefire against the Maoists, which they reciprocated immediately. The Maoists broke the ceasefire in November 2001, in response to which Prime Minister Deuba declared a State of Emergency. The conflict intensified over the following year, drew in the full participation of the Royal Nepal Army (RNA), and saw a dramatic increase in human rights violations.

On 4 October 2002 King Gyanendra, citing fears over the handling of the insurgency, requested Deuba's resignation and appointed a transitional government of his own choosing. On 29 January 2003 a ceasefire was once again agreed between the Maoists and the transitional government but peace talks failed and the Maoists unilaterally ended the ceasefire on 27 August 2003. On 1 February 2005 the King deposed the Government and took power directly. The takeover was met with widespread international criticism from India, the US, and the EU, including the UK. On 14 April the King announced his intention to gradually restore democracy.

In September 2005 the Maoists announced a three-month unilateral ceasefire and in November 2005, the Maoists and seven of the political parties (the Seven Party Alliance) announced a 12-point understanding aimed at ending the King's autocratic rule and restoring democracy.

Following weeks of nation-wide civil unrest (the ‘People’s Movement’) in April 2006, the King reinstated Parliament. G P Koirala was sworn in as Prime Minister on 30 April 2006 and proposals to hold elections to a Constituent Assembly and hold peace talks with the Maoists were passed. The peace talks concluded with the signing of the Comprehensive Peace Accord in November 2006 and the composition of an interim government that included the Maoists. Elections to a Constituent Assembly were finally held on 10 April 2008.

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INTERNATIONAL RELATIONS

Nepal's relations with the UK

The UK is highly regarded in Nepal on account of our long historical ties, development assistance and long-term support for democracy and peace in Nepal.


Visits to Nepal

-- Home Office Parliamentary Under Secretary of State, Equalities Office visited Nepal 13-15 June 2011

-- Minister for Defence Personnel, Welfare and Veterans, MOD, visited Nepal 24-30 March 2011

-- The Minister for International Development visited Nepal 7-10 March 2011

-- The Minister for International Development visited Nepal 26-28 May 2010.

-- The Prime Minister’s Special Representative for Peacebuilding visited Nepal 31 March-2 April 2010.

-- The Chief of the General Staff, visited Nepal from 6-9 February 2010.

-- Permanent Secretary, DfID, visited 30 June to 01 July 2009.

-- Under Secretary of State and Minister for Veterans, MoD, visited 14-18 April 2009.

-- Minister for International Development, DfID, visited 30 March-2 April 2009.

-- The British Group of the Inter Parliamentary Union visited 16-20 February 2009.

-- Minister for International Development, DfID, visited 24-27 November 2008.

-- Minister of State, FCO, visited from 18-19 July 2008.

-- Minister for International Development, DFID, visited from 20-22 June 2008.

Gurkhas

Gurkhas - Nepali citizens serving in the British Army - have been an integral and extremely important part our armed forces since 1948, and prior to that, of the British India Army and the East India Company Army. They are highly regarded around the world for their bravery and professionalism. The Brigade has a current strength of over 3,500 officers and men made up of two Infantry battalions of the Royal Gurkha Rifles and three specialist units comprising the Queen's Gurkha Signals, Queen's Gurkha Engineers and the Queen's Own Guard Logistic Regiment. The bulk of the Brigade is based in the UK, with one battalion in Brunei.

UK Development Assistance

Nepal is one of the poorest countries in Asia - The majority of the population, over 55%, live under the international poverty line of $1.25/day and are extremely vulnerable to economic, health, social and climatic shocks.

The ten-year conflict was a major obstacle to development. The backdrop to the conflict is deep-seated poverty, inequality, poor governance and discrimination. Britain is the largest bilateral donor to Nepal.

DFID’s Operational Plan for Nepal is allocating £331 million over 2011-2015.

We use both sector budget support and support through NGOs and the UN. The overall purpose of our aid is to reduce poverty and social exclusion, establishing a basis for lasting peace. The DfID programme in Nepal has the following priorities:

-- Support the peace process and help improve security and access to justice.

-- Make government more effective and deliver better health and education services.

-- Help poor people, particularly women, benefit from economic growth.

Help Nepal to adapt to climate change.

-- Reduce risk from disasters, including earthquakes

Cultural Relations with the UK

Britain and Nepal retain close cultural links, based on a long history of relations and friendly ties. The British Council (http://www.britishcouncil.org/new/) has an important role in Nepal promoting the cultural and educational relationship. It is focused on fostering and supporting links between schools in Nepal and the UK as well as links between university departments. It promotes UK education, teaches English and administers large numbers of UK examinations, principally A-levels and IELTS tests.

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GEOGRAPHY

Nepal covers approximately 147,000 sq km, stretching 800km from east to west and 90 to 230km from north to south. Nepal is land-locked between China (including the Tibet Autonomous Region) and India. Nepal has three geographic regions; the mountainous Himalayan belt (including 8 of the 10 highest mountain peaks in the world), the hills region and the plains region. Nepal contains the greatest altitude variation on earth, from the lowland Terai, at almost sea-level to Mount Everest at 8848 metres. Nepal is divided into five development regions and seventy-five districts.


Climate Change

Nepal is one of the most vulnerable countries in South Asia to climate change, yet it has limited capacity to address impacts of climate change or to take advantage of the opportunities. It has a highly variable climate and fragile ecosystems. The Himalayan glaciers are retreating faster than any other major body of ice. With climate change, climate variability, a driver of poverty in a country where 75% of the population is reliant on agriculture, will only increase. The monsoon rains are already more intense, but of shorter duration, and are arriving later, which has a devastating impact on the rice crop.

The Greater Himalaya region is the water tower of Asia. Nepal sits at a strategic point, in the headwaters of the Ganges basin. 500 million people live in this basin, which is one of the most flood-prone in the world. Currently Nepal's Himalayan Rivers supply 70% of the dry season water in the Ganges and 30% of the peak flood waters.

Nepal's potential for hydropower is 100 times its existing energy use. Current development of rivers are sub-optimal, focusing solely on hydro rather than also storing water in the summer to use for irrigation during the rest of the year and reduce flooding.

Yet, if Nepal could export its hydropower to India, it could get financing from carbon markets and raise $2bn p.a. in revenue. If Nepal accelerated the handing over of national forests to communities, and reversed forest degradation and deforestation, it could qualify for financing from the World Bank managed climate investment funds and voluntary carbon markets.

The UK is helping address the challenges posed by Climate Change by:

-- Working to enable Nepal to effectively influence climate change negotiations. We part funded the Kathmandu to Copenhagen regional climate change conference held in Kathmandu 31 August to 01 September 2009. We have also supported enhanced negotiation skills of Nepalese delegates to Cancun and Nepal’s leadership in highlighting mountainous countries issues in the international negotiations.

-- Supporting Nepal develop a framework for action on climate change and present immediate priorities through its National Adaptation Programme of Action (NAPA) Plus. Future plans are to design a Nepal Climate Change Support Programme to support the implementation of adaptation and climate-resilient development priorities identified in NAPA.

-- Increasing our support to the forestry sector, working with other donors to support a national, but decentralised, approach in forestry that benefits the poor, reverses deforestation, reduces corruption and attracts carbon finance.

-- Supporting the South Asia Water Initiative to improve water resource management regionally and manage the impacts of climate change, for which Nepal is key to its success.

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TRADE AND INVESTMENT

Traditionally Nepal looks South and East rather than West for her suppliers. India provides almost two thirds of Nepal's imports. Bilateral trade with the UK is modest: UK exports to Nepal in 2009 were worth £6.3 million (including transport equipment (e.g. aircraft parts) and special industrial machinery) and imports £12.7 million (predominantly clothing and textiles). The United Kingdom is the third largest foreign investor in Nepal. The UK government’s trade promotion organisation, UK Trade & Investment (UKTI) http://www.ukti.gov.uk/export/countries/asiapacific/southasia/nepal.html (http://www.ukti.gov.uk/export/countries/asiapacific/southasia/nepal.html) does not provide any official services in Nepal. Bilateral Chambers of Commerce have, however, been established, in the UK in January 1995 and in Nepal in December 1995, to promote bilateral trade.

Please visit the Britain-Nepal Chamber of Commerce (http://www.nepal-trade.org.uk/) website for further information.

For the year 2012 Nepal is ranked 107 (out of 183 countries) for ease of doing business on the World Bank Group’s Doing Business (http://www.doingbusiness.org/data/exploreeconomies/nepal/) website. This is an improvement of 3 places on the 2011 rankings.

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POLITICS

Recent political developments

Under the terms of the Comprehensive Peace Accord the Nepali Army and Maoist fighters are confined to barracks and cantonments. Both sides agreed a permanent ceasefire and an arms management arrangement. Until January 2011 this arrangement was monitored by the United Nations Mission in Nepal (UNMIN).

Elections to a Constituent Assembly (CA) were held on 10 April 2008. Despite some violence and intimidation, these were considered to be largely free and fair. In a surprising result, the Maoists were confirmed as the largest party with 237 seats in a 601-seat assembly.

The first session of the CA was held on 28 May 2008 and declared Nepal a republic, thus ending a 240-year old monarchy. Maoist Chairman Pushpa Kamal Dahal ‘Prachanda’ formed a majority, coalition government in August 2008.

On 4 May 2009 Pushpa Kamal Dahal resigned as Prime Minister over the President's decision to overturn his decision to sack the Chief of Army Staff. On 25 May, Madhav Kumar Nepal, a leading figure in the Communist Party of Nepal - United Marxist Leninist (CPN-UML), was sworn in as Prime Minister. Amid intense pressure from the main opposition, Prime Minister Nepal resigned in June 2010. He remained in office as head of a caretaker administration until 2 February 2011 when the CA finally succeeded in electing a successor, Jhalanath Khanal (UML), who formed a coalition with the Maoists and MJF-N.

On 28 May 2011 Nepal's Parliament amended the Interim Constitution in order to extend the mandate of the CA by three months.

On 28 August 2011 UCPN-M Vice-Chairman Baburam Bhattarai was elected as Prime Minister. This was followed on 29 August by a convincing vote in the Constituent Assembly (CA) to extend its term to the end of November 2011.

On 1 November the main political parties reached a seven point deal on most of the long-standing contentious issues left over from the Comprehensive Peace Accord, including the key issue of the integration and rehabilitation of former Maoist combatants.

The agreement was signed by the leaders of all the UCPN-Maoist, Nepali Congress, UML and MJF (with the consent of the other Madhesi parties).

The agreement also commits to the preparation of a draft constitution within a month; this timeline will exceed the Constituent Assembly’s current mandate which expires at the end of November. It is expected the Constituent Assembly’s mandate will be extended for a further 6 months.

Constituent Assembly

The CA is made up of 601 members, 240 directly elected, 335 through the Proportional Representation (PR) system and 26 nominated by the Cabinet. The Maoists are the biggest party with 38% followed by Nepali Congress with 19% and Unified Marxist Leninist with 18%. It is the youngest (average age 44 at time of election) and most inclusive (33% women and the highest number of members from excluded groups) institution in Nepal's history, but it is also inexperienced with almost 1/3 illiterate and many from NGOs with no political or parliamentary experience.

The current government faces a number of significant challenges, including decisions over the future of former combatants (both the Maoist People’s Liberation Army and Nepal Army), federalism, and the need to tackle impunity.


Terai unrest

In December 2006, following widespread protests and rioting in the southern region (Terai), Madhesi People's Rights Forum (MJF), led by Upendra Yadav, signed an agreement with the then government. The uprising was pacified after the government amended the interim constitution.

In January 2008, the three Terai-based parties joined forces to create a loose coalition named the United Democratic Madhesi Front (UDMF). On 26 February 2008, an agreement was signed between the then Government and agitating UDMF, paving the way for the CA election. The UDMF coalition parties participated in the CA election and secured 13% of the seats in the CA. Both MJF and TMDP have since suffered splits.

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HUMAN RIGHTS

Impunity for human rights abuses continues to be a major issue in Nepal. The lack of political will to address human rights violations and abuses, exacerbated by the weak capacity of the state to provide public security, means that lack of respect for human rights is widespread. None of the major parties see tackling impunity as being in their interests; many political leaders (and senior Nepal Army officers) are themselves implicated in human rights violations and abuses. Continuing impunity also contributes to the weak rule of law. Maoist cadres, other parties’ activists, and criminals often ignore state structures and attempt to fill the gaps left by a weak state administration. There are also abuses by violent armed groups operating mainly in the southern plains, bordering India. State security forces fail to deal adequately with crime due to political interference in cases.

UK action

Recognising that respect for human rights is a key component of sustainable peace, the UK consistently encourages all parties to respect human rights and to reduce human rights violations through diplomatic representation as well as through project funding. In addition, we regularly raise our concerns about the human rights situation, both in public and private, in coordination with OHCHR (http://nepal.ohchr.org/en/index.html) and with the EU.

We continue to engage with the Nepal Army (NA) to encourage greater respect for human rights, including through training courses which have started to introduce an understanding of International Humanitarian Law into all levels of the NA. UK ministers have engaged in constructive dialogue with the Chief of Army Staff to stress that tackling impunity is in the army’s own interests and would send a clear signal that the NA is working for democracy.

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Last Updated: November 2011

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