THE OUTLOOK FOR NEPAL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01012A018500040005-0
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 6
• Document Creation Date: December 23, 2016
• Document Release Date: February 25, 2014
• Sequence Number: 5
• Publication Date: July 11, 1961
• Content Type: NIE

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11-7/
NIE 38.1-61 ADVCON
11 July 1961
NATIONAL INTELLIGENCE ESTIMATE
THE OUTLOOK FOR NEPAL
7
/
NEPAL
/ '/
? Political prospects
? Economic outlook
? International affairs
NOTE: This is an advance copy of the conclusions of this estimate
as approved by the United States Intelligence Board. The com-
plete text will be circulated within five days of this issuance.
Central Intelligence Agency
,
4.6 aft tin lita
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Ity?ci
0
Submitted by the
DIRECTOR OF CENTRAL INTELLIGENCE
The following intelligence organizations participated in the
preparation of this estimate: The Central Intelligence Agency
and the intelligence organizations of the Departments of
State, the Army, the Navy, the Air Force, and The Joint Staff.
Concurred in by the
UNITED STATES INTELLIGENCE BOARD
on 11 July 1961. Concurring were the Director of In-
telligence and Research, Department of State; the Assistant
Chief of Staff for Intelligence, Department of the Army; the
Assistant Chief of Naval Operations (Intelligence), Department
of the Navy; the Assistant Chief of Staff, Intelligence, USAF;
the Director for Intelligence, Joint Staff; the Assistqnt to the
Secretary of Defense, Special Operations; and the Director of
the National Security Agency. The Atomic Energy Commission
Representative to the USIB and the Assistant Director, Fed-
eral Bureau of Investigation, abstained, the subject being out-
side of their jurisdiction.
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SECRET
CENTRAL INTELLIGENCE AGENCY
11 July 1961
SUBJECT: NIE 38.1-61: THE OUTLOOK FOR NEPAL
THE PROBLEM
To estimate probable developments in Nepal and in Nepal's
relations with India, the Communist countries, and the West
during the next few years.
CONCLUSIONS
1. Nepalese political developments in the near future
are likely to be centered on the conflict between King
and
Mahendra/the Nepali Congress Party exile movement. The King
has not demonstrated the qualities of leadership necessary
for the difficult tasks that face him. Nevertheless, he has
a number of factors in his favor, notably his control of the
country's security forces. (Paras. 8-14)
SECRET
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2. The Nepali Congress exile movement, which is led by
former Deputy Prime Minister Subarna Shumshere, has developed
only limited strength to date in its campaign to end the King's
direct rule. Most of the party's leaders, including former
Prime Minister B. P. Koirala, are under arrest. However, the
Nepali Congress is in the best position to take advantage of
the political unrest that is likely to develop under the King's
rule, but its ability to do so will depend on its success in
securing army support or passivity. The 10,000 man army pres-
ently appears loyal to the King, but if faced with continued
political deterioration the army might throw its support to
the Nepali Congress, seize power itself, or force the King to
compromise with the opposition movement. Considering all
factors, Mahendra's government is unlikely to remain in power
beyond another year or two. (Paras. 15-16, 18-19)
3. The Communist Party of Nepal has a limited but grow-
ing ability to influence events in Nepal. The party has let
the Nepali Congress take the initiative against the King while
it concentrates on improving its organization and infiltrating
governmental and other organizations. Conditions in Nepal will
provide growing opportunities for the Nepalese Communist.
(Paras. 17, 20)
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L.) Lo)
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4. Nepal has had little success in developing its sub-
sistence economy to date, and the outlook for any significant
economic growth during the, next few years is poor. Its devel-
opment efforts will continue to be almost entirely dependent
on foreign aid. However, a lick of economic progress is un-
likely to have serious political repercussions in the near
future. (Paras. 21-23)
5. , Virtually all Nepalese leaders are convinced that
Nepal should follow a neutralist foreign policy, particularly
in the UN. Mahendra, however, is more suspicious of India
than are the Nepali Congress leaders, and is likely to continue
to follow a more cooperative though still cautious policy to-
ward Communist China, which the Chinese Communists have
recip-
rocated, The King appears
of reliance on the Chinese
convinced that he can use the threat
to keep India from gaining too strong
an influence in.Nepal. (Paras. 24-26)
6. India's major interest in Nepal is to preserve the
country's integrity as a key element in the Indian security
position. India is likely to encourage Mahendra to reach a
compromise with the Nepali Congress, although in the event of
an extended struggle Indian support is likely to be increasingly
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Li LiSECRET
engaged on the side of the Nepali Congress. Nevertheless,
we believe that India will pursue a cautious course for fear
that Mahendra, if pushed too far, might rely More heavily on
Chinese support to stay in power. (Paras. 27-28)
7. Nepalese relations with the West are likely to remain
relatively gooch Nepal will continue to rely on the US for
substantial aid for its development program. (Para. 29)
(
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