Nepal’s international identity evolved as an ever-independent and oldest nation-state in South Asia. Nepal is known the world over as the country of Mt. Everest, the highest mountain in the world, the sacred birthplace of Buddha at Lumbini, and the home of the world-famous Gurkhas and peacekeepers. Nepal’s natural beauty, huge geographical and rich cultural diversity and heritages attract over a million people from all over the world as tourists each year. With a population of 29 million and a geographical area of 141,181 sq km, Nepal is a medium-sized country, 44th largest in population and 92nd in area in the world.
Politically, Nepal is a federal democratic republic with a vibrant democracy, an inclusive constitution and a robust political process. Economically, Nepal has a GDP of $35 billion (2022), with a per capita income of $ 1,208 (2021). Nepal is poised to be graduating from the group of the Least Developed Countries (LDCS) in 2026 and is expecting to become Middle-Income Country in 2030. As a landlocked country, Nepal’s economy has some structural weaknesses. Its economic dependence upon India comes from almost two-thirds of its trade with that country with a major trade deficit. Its hardworking people have reached all over the world constituting a diaspora community of their own in over 85 countries, totaling over five million. In recent years, Nepal’s economy has been receiving sizeable remittances sent by the Nepali migrant worker working abroad. Internationally, Nepal also receives some aid, export earnings, some foreign direct investment and income from tourism.
After its unification in 1768, Nepal maintained its independence and sovereignty using many foreign policy instruments, such as limited engagement, establishing diplomatic relations, and making friends with big powers and neighbouring countries, sometimes facing resistance and wars against the powers that came on its way. Nepal’s current boundaries were delineated after the Treaty of Sugauli (1816) concluded with British India after the British-Nepal War (1815), plus a small stretch in the southern plains that was added later. In the 1950s, Nepal opened up with a democratic process with the world welcoming foreign tourists and accepting aid for its economic development. Nepal sought a broad engagement with the wider world, becoming a member of the United Nations in 1955 and the Non-Aligned Movement (NAM) in 1961. Together with peaceful coexistence (Panchsheel) and world peace, the principles of the UN Charter and the NAM, are enshrined into the country’s constitution as Nepal’s foreign policy guidelines. Nepal attaches a strong significance to multilateralism and multilateral diplomacy keeping an active engagement with the United Nations and many other international and regional organizations. Nepal is an active player in regional cooperation, though the stalled regional cooperation process in SAARC and slow progress in BIMSTEC, have further delayed Nepal’s economic integration in the region, hence needs a renewed emphasis for the same.
Despite the hardships and challenges it faces, Nepal is striving to make economic progress and present itself in a dignified manner in the world. In recent years, Nepal has made significant gains in reducing poverty, and human and social indicators, raising the living standards of its people.
Today, Nepal has proactive engagement and excellent relations with its immediate neighbours – India and China-, and the extended neighbourhood consisting of other countries in South Asia, major powers of the world, partner countries, labour-receiving countries, and major developing countries of the world.
Nepal has been pursuing an independent foreign policy focusing on its national interests and cooperation with all countries of the world. Today. Nepal has diplomatic relations with 179 of 193 member countries of the United Nations. Nepal maintains a limited diplomatic outreach with 39 diplomatic missions, including 30 embassies, three permanent missions and seven consulates General, including in neighbourhood and major powers.
The world is becoming a big theatre of competition among major powers. Nepal’s location between two Asian giants-India and China- offers both challenges and opportunities. For its geopolitical importance, Nepal’s neighbours and big powers are in strategic competition vying to fend off their interests and influence in the country. Geopolitical and big power rivalries often push Nepal to take sides, threatening to compromise its declared policies of non-alignment.
Nepal is aware of the ongoing shifts in international relations, including in the major power relations, the emergence of new powers and alternative global governance institutions, the shifting balance of power to developing countries, particularly towards Asia, the rise of China and India, as big players internationally, the ongoing backlash against globalization, emergence of multipolarity, and a weakened multilateralism and fractured global governance. Nepal has to consider the trends in global politics, including the tide of nationalism, populism and fundamentalism while striving to strengthen its democratic institutions and practices.
Nepal is vulnerable to climate change, environmental disasters and food and energy insecurities, owing to the global neglect and denial of the existential threats to humankind. Nepal is striving to implement the Sustainable Development Goals (SDGs), albeit with a shortage of funds and international commitment as the means of implementation.
Nepal is not isolated from the international economic and financial trends, including the trade war, rise of protectionism, debt crisis and the collapse of commercial banks in various countries. It has to adopt prudent policies about its debt and financial problems so its economy does not plunge into a full-scale crisis. As Nepal prepares to graduate from the LDCs, it will have to adopt policies to thrive upon its comparative and competitive advantages than seek concessions in trade and aid it has been getting as the least developed country.
Nepal’s biggest challenges, such as the huge trade deficit, the Inability to find employment for youth at home, and the remittance-dependent economy, have external dimensions. Nepal must focus on its external drivers of economic growth and integration, including its export potential, FDI, tourism, remittance, and aid. It must continue to engage with its partners for a conducive international environment and support measures for its economic benefits while broadening its partnership with its burgeoning diaspora communities abroad.
Nepal has to take into account the trends in international diplomacy, including the shift towards public diplomacy, soft power, social media diplomacy, personal and summit diplomacy of global leaders, and the post-coronavirus digital and hybrid diplomacy. It should strengthen its economic diplomacy, diaspora engagement, and informal and multitrack diplomacy, including Track Two diplomacy, focusing on its national interests.
Nepal needs to work harder to improve its international standing on account of ranking on competitiveness, doing business, governance, corruption perception, etc. It should remain alert to the external trends and manage its external relations proactively utilizing its politics, diplomacy and economic means and capitalizing on its strengths and comparative advantages. Nepal should develop a well-defined vision, goals and targets, and use its external and domestic resources to pursue inclusive and sustainable economic growth. It needs leadership, political stability, good political management, good governance, and a conducive international environment to achieve its potential in the world.