FOREIGN
RELATIONS
As a small, landlocked country wedged between two much 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 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 signed with India in 1991 is renewed every five years. The most recent renewal was on March 6, 2007, which expires on March 5, 2012. A transit treaty with India, which allows Nepal to trade with other countries through the Calcutta/Haldia ports, was extended on March 30, 2006 for seven years.
Nepal 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. Nepal is also a signatory of the agreement on South Asian Free Trade Area (SAFTA), which came into force on January 1, 2006. A SAFTA tariff liberalization program (TLP) was scheduled to be implemented July 1, 2006. All member countries, except for Nepal, whose TLP started on August 1, 2006, reduced tariffs for each other. However, on July 1, 2006, Pakistan officially toughened its stance of not trading with India under the SAFTA arrangements and did not announce TLP for India. Due to the stalemate between India and Pakistan, the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation Free Trade Agreement (BIMSTEC-FTA), which was initially scheduled to come into force on July 1, 2006, was deferred indefinitely. The BIMSTEC Summit scheduled for February 8, 2007, in India was also deferred due to political instability in member states, including Nepal. On international issues, Nepal follows a non-aligned policy and often votes with the Non-Aligned Movement in the United Nations. Nepal participates in a number of UN specialized agencies and is a member of the World Trade Organization, World Bank, International Monetary Fund, Colombo Plan, and Asian Development Bank.
U.S.-NEPAL
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 center on helping Nepal build a peaceful, prosperous, and democratic society.
Since 1951, the United States has provided more than $791 million in bilateral economic assistance to Nepal. In recent years, annual bilateral U.S. economic assistance through the U.S. Agency for International Development (USAID) has averaged $40 million. USAID supports agriculture, health, family planning, environmental protection, democratization, governance, and hydropower development efforts in Nepal. USAID is also supporting Nepal's peace process, as well as its preparation for Constituent Assembly elections. The United States also contributes to international institutions and private voluntary organizations working in Nepal. To date, U.S. contributions to multilateral organizations working in Nepal approach an additional $725 million, including humanitarian assistance. The Peace Corps temporarily suspended its operations in Nepal in 2004 due to increasing security concerns, and officially terminated its Nepal program in 2006.
DEFENSE
Nepal's military consists of the nearly 95,000-strong Nepalese Army (NA), which is organized into six divisions (Far-Western, Mid-Western, Western, Central, Eastern, and Valley Divisions) with separate Aviation, Parachute, and Security Brigades as well as brigade-sized directorates encompassing air defense, artillery, engineers, logistics, and signals which provide general support to the NA. The Prime Minister is the Supreme Commander of the NA. The Prime Minister is currently Minister of Defense. General Rookmangud Katawal is Chief of the Army Staff (COAS), also the senior commissioned officer of the NA.
Since 1958, the NA has contributed over 50,000 peacekeepers to 28 peacekeeping missions such as the UN Interim Force in Lebanon (UNIFIL), the UN Protection Force (UNPROFOR) in the former Yugoslavia, the UN Operational Mission in Somalia II (UNOSOMII), the UN Mission in Haiti (UNMIH), and the UN Mission of Support in East Timor (UNTAET). NA units are presently serving in the UN Mission in Sierra Leone (UNAMSIL), the UN Mission in the Democratic Republic of the Congo (MONUC), and the UN Mission in Haiti (MINUSTOH), among others. Approximately 3,400 of the world-famous Nepalese Gurkha forces serve in the British Army, and 40,000 serve in the Indian Army.
The U.S. Pacific Command (USPACOM) coordinates U.S. military engagement and security assistance with Nepal through the Office of Defense Cooperation. Cumulative U.S. military assistance to the NA has consisted of $21.95 million in grant assistance: Foreign Military Financing (FMF) since 2002, annual professional and technical training provided under the International Military Education and Training Program (IMET grant for $650,000 in FY 2006), additional training provided under the Counter Terrorism (CT) Fellowship (approximately $200,000 annually), and approximately $2 million of Enhanced International Peacekeeping Capabilities (EIPC) funding to increase the pool of international peacekeepers and promote interoperability. Many NA officers attend U.S. military schools, conferences and seminars such as those provided by the National Defense University (NDU) and the Asia Pacific Center for Strategic Studies (APCSS).
Principal U.S. Officials
Ambassador--Nancy J. Powell
Deputy Chief of Mission--Randy Berry
Counselor for Management Affairs--Keith Sanders
USAID Director--Beth Paige
Political and Economic Chief--Williams S. Martin
Consular Chief--Mary Emma (Mea) Arnold
The U.S. Embassy in Nepal is located in Maharajgunj, Kathmandu (Tel: [977] (1) 400-7200; fax: [977] (1) 400-7272).
