NEPAL: CONTINUITY AND CHANGE IN A HIMALAYAN MONARCHY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84S00927R000200030003-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 20
• Document Creation Date: December 22, 2016
• Document Release Date: January 30, 2012
• Sequence Number: 3
• Publication Date: November 1, 1983
• Content Type: REPORT

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Directorate of Seer
Intelligence
Nepal: Continuity and
Change in a Himalayan
Monarchy
Secret
NESA 83-10307
November 1983
Copy 2 8 8
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Directorate of Secret
Intelligence
Nepal: Continuity and
Change in a Himalayan
Monarchy
This paper was prepared by
Office of Near Eastern and South Asian
Division, NESA,
Analysis. It was coordinated with the Directorate
of Operations. Comments and queries are welcome
and may be directed to the Chief, South Asia
Secret
NESA 83-10307
November 1983
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Monarchy
Nepal: Continuity and
Change in a Himalayan
Key Judgments King Birendra's largely cosmetic modernization of Nepal's feudalistic
Information available political system has bought time for the monarchy as a ruling institution in
as of 3 October 1983 one of the world's poorest and most backward countries. Having let the re-
was used in this report.
form genie partly out of the bottle, however, neither Birendra nor his
successors can reverse course without risking a serious popular backlash.
After four years of cautious reform, royal power remains intact, and the
King's legitimacy is undisputed. Stability will depend on the King's resolve
and ability to sustain the reform process. Ultimately, he must decide how
much power to share with the people's representatives and how to balance
elite interests with aspirations of newly politicized groups eager to benefit
from participation.
Prospects for reform are clouded by the Kin 's many doubts about Ne al's
future.
His liberalizing instincts are offset by a
natural tendency-reinforced by conservative members of his family-to
preserve his power. He has concentrated on liberalizing only local aspects
of Nepal's partyless system of government without diluting royal authority
over important national issues. He appears oblivious to broader problems of
national integration that could destabilize Nepal in the longer term.
Although the death of the 37-year-old King would pose no major
succession problems, his replacement by a palace hardliner would almost
certainly bring a reassertion of royal authority and increase popular
discontent. Working against the possibility of widespread disorder, howev-
er, is the tradition-bound nature of Nepalese society, which in our view
minimizes the chances of violent revolution in the near future.
US interests derive from Nepal's location as a buffer between Asia's two
giants-India and China. Although we believe these states are unlikely to
fight over Nepal, prolonged instability there could lead to intervention by
one or both powers and trigger a serious confrontation. We believe Nepal
will continue to provide a moderate and pro-US voice in the nonaligned
movement and other international forums. As a psychological defense of its
sovereignty against India's regional supremacy, Nepal will continue to seek
international recognition as a zone of peace.
Secret
NESA 83-10307
November 1983
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Boundary rearesentatloe is
not necessemy authodtntlve.
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Nepal: Continuity and
Change in a Himalayan
Monarchy
Nepal's recent political history has centered on King
Birendra's efforts to provide some representative local
government without diluting royal authority over
important national issues. Although his reforms are
only a cautious half-step toward sharing power, we
believe they have set a precedent for future liberaliza-
tion. According to numerous press reports:
? Nepalese voters in May 1980 chose to retain party-
less democracy, a bitter pill for proponents of a
multiparty alternative.
? King Birendra amended the constitution the follow-
ing December to provide for direct elections to the
National Panchayat (Assembly) on the basis of
adult franchise, to empower the National Panchayat
to submit a single name to the King for the prime
ministership, and to make the Council of Ministers
responsible to the assembly instead of the palace.'
? Voters returned to the polls in May 1981, Nepal's
first general election in 22 years, to choose a new
National Panchayat. In what proved to be a serious
miscalculation, most of the banned parties decided
against having their members run as independents.
This left a clear field to candidates within the
system who were backed by the Prime Minister
and/or the palace.
Although these reforms introduced some genuine
political changes, many others were cosmetic-a re-
flection, in our view, of the King's ambivalence
toward delegating any real authority. He can still
maneuver his own choice into the prime ministership
without much difficulty and can dismiss him without
explanation should he need a scapegoat. The number
of royal appointees to the National Panchayat has
been increased slightly to give the King more support-
ers. In an empty gesture to the parties, the King
opened the system to all "nationalist elements" but
then required candidates to swear allegiance to the
partyless system.
Liberalization and the Monarchy
Since opening itself to the outside world three decades
ago, Nepal has become increasingly polarized be-
tween traditional and modern ways of life, values,
attitudes, and political institutions. Knowledgeable
observers see this tension reflected throughout govern- 25X1
ment and society and, most importantly, within the
King himself.
Nepal's feudal elite is reacting to pressures for more
change by trying harder to keep power centralized in
Kathmandu and to govern the rest of the country
through traditional repressive techniques, according
to Embassy analyses. Progressive forces-liberalizing
elements within the National Panchayat, the student
population, the rising middle class, and the multiparty
opposition-are diffuse, divided, and directionless.
Mass education and increasingly modern communica-
tions, however, are working against the established
elite by awakening political aspirations among tradi-
tionally disinherited groups. 25X1
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Nepal's stagnant economy remains the country's most
glaring long-term weakness. Popular discontent over
last year's food shortages clearly demonstrated that,
to avoid serious unrest in the next few years, visible
economic progress will need to accompany the gov-
ernment's political modernization.
The economy is heavily dependent on agricultural
production, which in turn is vulnerable to the mon-
soon. Agriculture employs more than 90 percent of
the labor force and normally accounts for about 60
percent of GDP and 75 percent of exports. The
country's minuscule industrial sector is based largely
on agricultural processing. Population increases, seri-
ous soil erosion, and weather fluctuations have erod-
ed Nepal's status as a consistent food surplus coun-
try. A severe drought in 1982 contributed to food
Correcting Nepal's many economic deficiencies may
prove beyond the capacity of any government. For the
past two decades, annual growth of real GDP has
languished at a 2- to 3 -percent rate, barely enough to
keep abreast of population growth. Efforts by Prime
Minister Chand's new government to mobilize re-
sources and improve economic performance will be
hampered by.
? An inadequate institutional base.
? Low productivity.
? Scarcities of managerial and technical skills.
? Limited natural resources.
? Growing population pressure on limited agricultur-
25X1 al land.
he believes the country can absorb.
cy and that he intends to introduce change at a pace
Birendra's Western education-Eton, Harvard, and
Tokyo University-enables him to serve as a link
between traditional and modernizing forces and
gives him a unique perspective within the highly
conservative royal family. Unlike them, we believe he
recognizes the value of royally controlled political
liberalization concurrent with economic development
to prevent upheaval and preserve the monarchy's
power. According to Embassy sources, he is haunted
by the fate of the late Shah of Iran. Nevertheless,
Birendra himself has told US officials that he is
convinced Nepal is not ready for unfettered democra-
shortages in several areas, which necessitated emer-
gency food imports; a 3 -percent decline in total
agricultural production; and a sharp increase in the
trade deficit, all of which brought about the first
overall external payments deficit in eight years
Heavy dependence on wood for fuel-an estimated 85
percent of total energy consumption-has been large-
ly responsible for rapid deforestation and soil erosion
in the hills. According to press reports, Nepal's
forests have shrunk 25 percent during the past two
decades. The loss of valuable topsoil has helped
lower agricultural productivity in the hills which in
turn has prompted an exodus of hill dwellers to the
Terai region.
Water is Nepal's most valuable natural resource. The
country's hydroelectric potential is sometimes esti-
mated as high as 86,000 megawatts-about six times
that of the United States and Canada combined-
though vulnerability to earthquakes and the high cost
of investment in distribution systems will prevent full
exploitation. Development of major hydroelectric
projects on the Karnali and Rapti Rivers would
require considerable foreign financing, but exports of
surplus power to India would boost the economy
significantly by providing a steady source of export
earnings. Although we believe Nepal wants to develop
its water resources in cooperation with India, Kath-
mandu's deep-seated fears of being coerced by New
Delhi continue to inhibit progress in bilateral negotia-
tions.
Embassy sources say that the King envisages a politi-
cal system in which final authority rests in the palace
with details of running the country left with the
people's representatives-the prime minister and the
National Panchayat. Folowing royal tradition, he will
seek to balance subordinate political forces to deny
any group or individual sufficient power to challenge
royal authority. Avoiding direct involvement would
also shield the monarchy from growing popular criti-
cism of government malfeasance and inefficiency.
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priorities and resources.
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. Pohhara
epal
Decentralization. The current centerpiece of Biren-
dra's modernization blueprint grants decisionmaking
authority on development planning and implementa-
tion to local officials. According to Embassy report-
ing, the King recognizes that the elitist political
leadership that emerged under the unreformed pan-
chayat system was seriously out of touch with popular
aspirations. Last year's decentralization legislation
sharply reduced the power of middle-level functionar-
ies who formerly dominated panchayat politics and
opened the way for a more democratic relationship
between National Panchayat members and their con-
stituencies. It should strengthen the representative
role of National Panchayat members, who will need to
reconcile the needs of their districts with national
Royal Doubts and Dilemmas. We believe royally
sanctioned liberalization is unlikely to be smooth,
although there are signs that democratization is slow-
ly gaining in some areas. Embassy and press sources
agree that Birendra's ambitious goals will require
strong resolve and a steady hand at the helm. Biren-
dra, however, is neither forceful nor dynamic, and we
believe he harbors many doubts about Nepal's future.
KATHMKNDU*J'
.ghimphedi
A/
China
. Rimechhipi
Rijhi
Although he can formulate broad policy outlines, he is
not adept at the political fine-tuning necessary to
make his reforms work. 25X1
In our judgment, the King is torn between his in-
stincts to share power and a natural tendency-
reinforced by conservative members of his family-to
preserve it for himself. Plagued by this internal
conflict, he often takes refuge in isolation and
inaction.
Although some of his personal
inconsistencies may be intentional-to prevent subor-
dinates from outmaneuvering him-we believe that
many stem from indecisiveness and an innate discom-
fort with politics.
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The King has managed to avoid a real dilution of
royal power. Despite the liberalization, we believe the
palace will remain the nerve center of Nepal's politi-
cal life for the near future. Although Birendra has
adopted a public posture of withdrawing from routine
matters-presumably to avoid casting doubt on his
democratic intentions-Embassy reporting maintains
that the palace continues to guide government policy
from behind the scenes and to intervene in virtually
every decision.
The National Panchayat-In Search of a Role
Nepal's National Panchayat has never carved out an
institutional role for itself in the national decision-
making process, according to various academic stud-
ies, and, in our view, the King is unlikely to grant the
assembly significant legislative power in the near term
that might enable it to challenge palace authority. An
assembly of 140 members that meets only three
months a year, the National Panchayat offers a
measure of symbolic but essentially powerless partici-
pation in the country's political life. Until recently it
mainly brought local grievances and aspirations to the
attention of central authorities. In our view, on na-
tional issues it is little more than a rubberstamp for
palace initiatives.
Royal control is enhanced by the absence of political
parties to promote group interests and programs.
Without any mechanism to impose discipline, pro-
ceedings usually focus on personality disputes instead
of national issues. According to Embassy and press
reporting, the assembly has traditionally consisted of
a diverse collection of individuals who speak and
campaign for themselves. Opinions on issues are
usually fluid and ill defined-many members depend
on the Prime Minister (and ultimately palace pres-
sure) to bring order to their ranks on substantive
matters. Although identifiable clusters occasionally
coalesce, the formation of parliamentary factions is
strongly discouraged. The Embassy also notes that, in
the past, the King has co-opted specific interest
groups by offering their leaders access to the Council
of Ministers.
The Impact of Recent Changes. The intense election-
eering of 1980 and 1981 appears to have greatly
increased public interest in political participation at
all levels, according to press and Embassy reporting.
Candidates campaigned for votes by pledging better
roads, schools, and hospitals for their districts. As a
result, newly elected legislators are being petitioned as
never before by constituents seeking delivery of gov-
ernment programs and benefits. We believe public
interest in National Panchayat activities has also been
strengthened by greater media coverage of its pro-
ceedings-including explicit criticism of the govern-
ment-which the King permitted for the first time
last year.F___1 25X1
Recent reforms may prompt the National Panchayat
to press for a greater share of power and a more
responsible role in government. In our view, the
introduction of direct elections through adult fran-
chise has given the assembly a new authority to speak
for the public interest. It has also encouraged a new
and younger breed of politician who is less dependent
for election on caste and family-based local influence
and more reliant upon the political skills necessary to
appeal to a larger cross section of voters. Several
Embassy sources have reported that the King himself
has encouraged the transition toward a new genera-
tion of leaders to infuse life into his liberalization
efforts.) 25X1
The influx of new people with more varied back-
grounds may foster a trend toward interest-group
development centered on issues but probably will not
lead to a formalized factional structure. Press ana-
lyses note that the National Panchayat elected in
May 1981 is younger and generally better educated
than its predecessors. Of the 112 elected members,
almost half are newcomers without official palace
backing. Several, including one of the two winners in
populous Kathmandu, were clearly antiestablishment
agitators elected as a form of protest. 25X1
New Assertiveness? The National Panchayat is begin-
ning to show uncommon assertiveness in its relations
with the palace, In the 25X1
past three years a group of young, reformist legisla-
tors dedicated to the partyless ideal united successful-
ly to achieve an objective contrary to palace wishes-
the removal of controversial Prime Minister S. B.
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Thapa. Embassy reporting indicates that the King's
retention of Thapa strengthened their resolve to un-
seat him. By July 1983 the liberals mustered enough
support for an unprecedented vote of no confidence
against Thapa, and we believe the King acquiesced in
his removal both to distance himself from an unpopu-
lar minister and to discourage the fledgling opposition
Palace Tactics. In his pursuit of national unity, the
King would welcome participation by party elements
in national politics, in our view, but only on his terms.
For their part, we believe the parties would like to
join, but psychologically they cannot bow to Biren-
dra's insistence that they renounce party labels and
swear loyalty to a system they have bitterly opposed
from further tests of strength.
The anti-Thapa opposition's success, in our view, has
infused a new sense of purpose into National Pancha-
yat proceedings that could encourage challenges to
As long as opposi-
tion remains within bounds, the King will tolerate it in
the broader interests of political liberalization.
25X1
Opposition Parties-The Politics of Impotence
Nepal's political parties, in our judgment, continue to
sink into irrelevance and are unlikely to significantly
threaten the monarchy or the survival of the pancha-
yat system. We believe they are not viewed by the
public as a national alternative and have effectively
denied themselves a role in the King's reform process.
remove them from the Nepalese mainstream.
We believe a key contribution to party decline has
been a lack of organization and strong leadership and
a pervasive indifference to programs and ideology. In
their public statements, political parties have tended
.to bid for voter support by opposing the panchayat
system instead of proposing concrete solutions to
national problems. Although all have pockets of
strength, in our view none can really claim a national
base. Allegiances are largely ephemeral and governed
by personal loyalties. With the possible exception of
small, scattered radical groups, the parties generally
support the monarchy because to do otherwise would
for two decades.
Fully legalized party activity is not likely to return to
Nepal in the near term. Respected observers have
long contended that, like his father, Birendra deeply
distrusts parties and politicians, whom he views as
antinational agents of foreign powers. In our view,
Birendra acknowledges that these groups are poten-
tially useful vents for antigovernment frustration.
Recent events suggest he will probably keep the
parties alive but impotent, using his resources and
influence to keep them preoccupied and off balance.
Since the death last year of NCP stalwart B. P.
Koirala, the King's actions suggest he has begun to
regard the NCP as less of a threat to his authority and
to recognize the merits of retaining it as the moderate
center of Nepalese politics. As a result, he has begun
to boost NCP fortunes at the expense of Communist
and leftist elements In 25X1
November 1982 Birendra allowed the party to hold its
first formal national conference in 23 years, which
gave the NCP a chance to confirm its post-Koirala
leadership. The palace also granted permission for the
party to hold a large rally commemorating the anni-
versary of Koirala's death last July.
Students-The Vanguard of Dissent. Nepal's vocal,
leftist-dominated student movement is critical of the
panchayat system, but we do not believe it constitutes
an effective political force. Like the various parties
with which they are affiliated, student organizations
25X1
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Major Political Parties
The Nepali Congress Party (NCP)-still by far the
most important political element-has managed to
survive the death in July 1982 of its revered leader
B. P. Koirala, the kingdom's only politician with a
claim to national leadership. According to press and
Embassy analyses, Koirala's successors, a triumvi-
rate of his lieutenants, are continuing his policy of
reconciliation with the monarchy, but they appear to
have inherited his opti-
mism that the King will eventually need to include
among the country's Communist leaders,
them in any liberalized political system.
Man Mohan Adhikari, the leader of one faction of
the much-divided Communist Party of Nepal (CPN),
in our view, comes closest to rivaling Koirala's
popular appeal.
Formerly
pro-Chinese but now posing as a nationalist, Adhi-
kari has a reputation as a responsible moderate
are highly factionalized and reflect the general politi-
cal disunity in the country. Nonetheless, we believe
they remain an important political barometer because
they are permitted to conduct elections and operate
more openly than their sponsors.
The Communist elements in Nepal have far less
following than the NCP-at most only afew thou-
sand members-while suffering most of its structural
weaknesses, according to Embassy sources. We be-
lieve there is little public sympathy for Communism
as an ideology, especially in the conservative, tradi-
tion-bound countryside where most Nepalese live.
Embassy reporting suggests that Communists tend to
be strong on campus and in the eastern Terai area,
where their numbers may be rowin but not enough
to threaten the government. 25X1
Ironically, the palace has pursued a deliberate policy
over the past two decades of co-opting Communist
and leftist groups into the government as a means of
fosterin national unity and outflanking the moderate
NCP,
Communist have no way to judge the extent of this
ommunist presence but do not believe it constitutes
a near-term threat to the government. Members of the
CPN's pro-Moscow wing, led by Keshar Jung Raya-
majhi, who is a longtime supporter of the monarchy,
have run for office as independents at both local and
national levels presumably at Soviet behest-but
with limited success. In the past Birendra has sur-
prised observers by appointing senior 25X1
officials W1111 Communist connections as long as he
believed they were completely loyal to him.
Memories of the student role in disturbances in 1979
have not faded, and we believe the King is determined
to keep abreast of-and occasionally manipulate-
student activities. Palace fears of growing Communist
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The Role of the Army
The King's power rests largely on the support of the
small Royal Nepalese Army-the principal instru-
ment for maintaining internal security. The Army is
commanded by members of elite families who have
traditionally and faithfully served and been served by
the dynasty. Although our evidence is scanty, we
believe Army leaders are generally loyal to Birendra
and, on balance, are well looked after by him.
No signs of widespread disloyalty are apparent, but
we believe service outside the kingdom in UN peace-
keeping efforts has broadened the political perceptions
of many officers and increased their resentment of the
feudal elite's monopoly on power. So far, most of this
discontent has been focused on politicians, bureau-
crats, and senior officers for inefficiency, favoritism,
and rampant corruption. Although Birendra has occa-
sionally cashiered senior officers for corruption, Em-
bassy sources have indicated that some middle-grade
officers have criticized the King personally for not
doing more. Other knowledgeable observers report
that, in defiance, many officers and enlisted men
violated "orders" by voting for a prominent-and
ultimately successful-antiestablishment candidate in
Kathmandu during the 1981 general election
The Army shows no signs of political ambition, but, in
our view, it would seize power at least temporarily if
the King were assassinated and a destabilizing power
vacuum resulted. We believe the Army would also
take over if Nepal's economy, public order, or strate-
gic situation deteriorated to such an extent that
national independence was threatened and the King
appeared unable to respond.
Potential Threats to Stability
The Nepalese Government believes that the most
likely threat to internal security would be civil distur-
bances or local insurrections mounted by scattered
radical leftist groups, according to defense attache
reporting. Embassy informants indicate that the pal-
ace has recently taken steps to improve the Army's
ability to handle domestic unrest, and we believe it
can suppress all but the most serious and widespread
disturbances. Although we do not regard the leftist
threat as serious now, perceived government indiffer-
ence to critical problems like last year's food short-
ages would almost certainly erode public confidence
in both the government and the monarchy and provide
dissident groups with a means of rallying popular
support.
Corruption -A Threat to the Monarchy? In our view,
the royal family is especially vulnerable on the issue
of corruption. In recent years there have been signs of
a backlash against privilege-particularly among edu-
cated but unemployed youth-that could eventually
spill over to the palace. Prohibitions against public
criticism of the King and his family have helped
Birendra distance himself from the issue of govern-
ment corruption, which has received considerable
press recently, but the rest of the royal family is
commonly perceived to be benefiting from it. Accord-
ing to Embassy reporting, corruption among the
palace secretaries, who are thoroughly susceptible to
bribery, is also damaging the King's reputation
Unlike his siblings, the King is generally regarded as
honest by his subjects, according to Embassy sources,
but we believe he risks being tarred with the same
brush by appearing to tolerate his family's shady
business activities. Although Birendra is aware of 25X1
palace corruption, some trustworthy observers suggest
that he is deeply frustrated by a combination of
reluctance and inability to discipline his family and
the palace entourage. His last campaign to do so,
three years ago, was both halfhearted and short lived.
The Long View. Growing regional and ethnic strains
in this highly pluralistic society are likely to challenge
the King's attempts to maintain stability as his re-
forms take root in the years ahead. We believe the
limited liberalization achieved thus far has whetted
popular appetites for change without addressing a
number of fundamental political and social inequities.
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A family history of heart trouble coupled with the
King's tendencies toward obesity and heavy drinking,
increase the risk that the 37-year-old Birendra could
die relatively young. Both his father and grandfather
succumbed to heart attacks while in their early
fifties.
We believe King Birendra's death in office should
pose no insurmountable succession problems despite
the minority of 12-year-old Crown Prince Dipendra.
Prince Gyanendra, the King's younger brother, and
Queen Aishwarya would probably share control as
regents, at least initially. In our view, however, these
hardliners would almost certainly halt the reform
process and reassert royal authority, which could
ultimately lead to a destabilizing confrontation be-
tween traditionalists and liberals.
If the succession leads to a palace power struggle,
Gyanendra could seize power with the backing of the
military and his conservative stepmother, Queen
Mother Ratna. Gyanendra occupied the throne brief-
ly as a child during the 1950 revolution, and Embas-
sy reporting suggests he may consider himself better
qualified for the throne than his brother, although he
does not question Birendra's legitimacy. A formida-
ble figure in the palace power structure, according to
Embassy ~Gyanendra has a greater ability to
command, strike hard deals, and reward personal
loyalty than the King. We believe he would relish the
royal role.
Despite recent reforms, the panchayat system remains
inherently unrepresentative. Reputable scholars have
noted that, under the Constitution, participation in
the National Panchayat is weighted heavily in favor
of the sparsely populated hill and mountain dis-
tricts-the traditional backbone of support for the
monarchy and the panchayat system-and against
the teeming Terai belt adjacent to northern India.'
This disparity grew out of a conscious palace effort in
the 1960s to disenfranchise the Terai region, which
'The narrow Terai region, which runs along Nepal's southern
border, is ethnically and topographically an extension of the north
knowledgeable observers consider a breeding ground
for Indian-financed political discontent and occasional
underground activity aimed at the monarchy.
Failure to integrate the Terai into the national main-
stream could seriously jeopardize Nepal's political
and economic future, yet
governing elements in Kathmandu are not interested
in righting the balance. The region comprises 17
percent of Nepal's land and about 40 percent of its
population, yet it contributes well over half of the
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country's GDP and its domestically generated govern-
ment revenue. We believe widespread political unrest
in the Terai could prove ruinous for Nepal's fragile
economy. Some scholars conclude that, socially and
politically, the plains people of the Terai feel alienated
from the hill-dominated government in Kathmandu
and closer to India. Tensions in the region are being
further aggravated by overcrowding, which stems
from a continuing influx of hill peoples from the north
and Indians from the south seeking economic opportu-
nity. According to Nepalese Government studies, the
population growth of the Terai is almost double that
of the hill and mountain areas, and we believe it will
continue to surpass them through the end of this
century.
Nepal must also begin to deal constructively with a
growing political awareness among ethnic groups
traditionally outside the system but now seeking
25X1 access to power. certain
tribes are likely to challenge the established high-
caste domination of government in the years ahead.
Recent reforms and election activity appear to have
awakened these groups to the benefits of political
participation. Government election statistics indicate
that voter turnout in both national elections was
highest in rural areas, where 90 percent of Nepal's
population lives. The group of newcomers in the
National Panchayat includes several tribal politicians
who were elected against high-caste opponents, which
knowledgeable observers believe reflects increased
ethnic awareness and dissatisfaction with the ruling
25X1 elite.
Attempts by elite communities to stifle rural aspira-
tions would undermine national unity and could lead
to widespread unrest.
Outlook
We believe that Birendra will remain the central
figure in Nepalese politics for the near future. His
modest liberalization program has almost certainly
bought time for the monarchy as a ruling institution.
How much time, however, will depend on the role he
establishes for himself and the power he proves willing
to surrender to the people's representatives. In releas-
ing some pressures for change, he has unleashed
unprecedented social and political forces that he may
neither understand nor be willing to accommodate.
Political stability, in our view, will depend significant-
ly on how Birendra plays his hand. Although Prime
Minister Chand favors increased democratization, his
ability to impart a sense of movement will require the
backing of the King. Caught between the forces of
change and those of the status quo, Birendra can be
expected to give up as little actual power as possible
but will keep the liberalization process moving at a
pace he believes Nepal can tolerate. Having let the
genie of reform out of the bottle, however, neither the
King nor his successors can reverse the process with-
out risking grave political consequences. To preserve
political stability and national unity, he will have to
strike a balance between liberal and conservative
forces-a highly complex game that we believe may
prove beyond his ability or resolve.
deal with them constructively.
Given the tradition-bound nature of Nepalese society,
in our view, change is likely to occur slowly, although
probably faster than the King would like. Traditional-
ly disinherited groups will continue to seek a larger
share-of power and political profit. Stresses and
strains produced by accommodating these new partic-
ipants may cause some local unrest-especially in the
volatile Terai region-but they are unlikely to threat-
en national unity provided Kathmandu begins soon to
US Interests
US interests in Nepal derive primarily from its role as
a buffer between India and China. We believe the key
US interest in regional stability would be threatened
only in the unlikely event that domestic turmoil in
Nepal provoked a confrontation between these two
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neighboring states. Nepal itself has been a moderate
and generally pro-US voice in most nonaligned and
Third World forums, and in the past Kathmandu has
rendered valuable international service by contribut-
ing troops to UN peacekeeping operations.
In our view, Washington's interest in Nepal would be
best served by an orderly transition toward political
liberalization in tandem with accelerated economic
development. US ability,to encourage this, however,
will be severely limited by Nepalese sensitivities about
foreign involvement in the kingdom. An unqualified
endorsement of Nepal as a zone of peace, which
Kathmandu ardently seeks, would risk complicating
US relations with a clearly unsympathetic India.
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Appendix A
The Background to
Political Liberalization
Nepal is one of the world's most backward countries,
with an estimated per capita GDP of $156 and one of
the highest population growth rates in Asia (2.5
percent). The kingdom is struggling to enter the 20th
century, but modernizers face an uphill battle. Pro-
gress is inhibited by a natural resistance to innovation,
25X1 illiteracy (about 80 percent), and grinding poverty.
Socially, economically, and politically, Nepal is an
anachronism. Unlike India, it was neither colonized
by the West nor exposed to Western philosophies of
government. Until the early 1950s Nepal was virtual-
ly isolated from the outside world. Ruled by one of the
world's few remaining absolute monarchs, the country
continues to be dominated politically by its feudal
past.
Geography inhibits communication and transporta-
tion and has been a major hindrance to economic
development and national integration. Even today the
only motorable route from Kathmandu to western
Nepal lies through Indian territory, and distances in
the hilly regions are often measured in the number of
days it takes to walk them. Until 1769, when the
country was unified by an ancestor of the current
King, Nepal consisted of numerous small principali-
ties in deep valleys isolated from each other by high
25X1 mountain ranges.
Social fragmentation continues to plague national
integration. The country's 16 million people comprise
a mosaic of ethnic, cultural, and linguistic diversity.
No single ethnic group constitutes a majority, and,
according to Nepalese census figures, only about 52
percent of the people speak Nepali as a mother
tongue. Tribes of the far north are of Tibetan extrac-
tion, but most Nepalese-including the royal fam-
ily-claim Indian descent and embrace Hindu social
and religious values. Although discrimination on the
basis of caste is prohibited, attitudes and relationships
inherent in the Indian caste system pervade Nepal's
political and social life.
The Feudal Basis of Politics
The legitimacy of the monarchy, which is deeply
rooted in Nepal's history and religion, is virtually
undisputed, a judgment on which scholars and Em-
bassy reporters agree. The King plays a critical
unifying and stabilizing role in this highly complex
society. He is a symbol of Nepal's separate identity
from India and the guarantor of its sovereignty, as
well as the source of all political authority. Modern
Nepalese kings have consistently undercut any politi-
cal leader or group that could challenge the suprema-
cy of the palace. Religious values bind the King to his
people. A potent source of Birendra's power is his
acceptance by Nepal's Hindu majority (89 percent) as
a reincarnation of the god Vishnu-an ancient tradi-
tion reserved for Nepalese kings.F____1 25X1
Academic studies and Embassy sources indicate that
positions of power and profit continue to be monopo-
lized by a narrowly based feudal elite consisting of a
handful of high-caste families who base their privi-
leges on a history of service and allegiance to the royal
family. Although caste data are no longer included in
Nepalese censuses, we believe these groups represent
a distinct minority in the kingdom.F___1 25X1
"Partyless Democracy"
Histories of the period record that most of Nepal's
halting attempts at democratic government in the
1950s were politically unproductive, and all resulted
in reversions to direct royal rule. The most successful
of these experiments was launched in 1.959, when the
Nepali Congress Party (NCP)-a democratic socialist
party then influenced and guided by the Indian
Congress Party-easily won a majority in the coun-
try's new parliament, and its leader, B. P. Koirala,
became Prime Minister. Eighteen months later, how-
ever, then King Mahendra, chafing in his unaccus-
tomed constitutional role, staged a royal coup and
resumed direct rule, abolishing the parliament and
jailing most of the senior politicians. 25X1
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Scholars agree that Mahendra considered parliamen-
tary democracy unsuited to Nepal's culture and level
of development, and that he replaced it with a four-
tiered heirarchy of councils known as panchayats to
build political participation upward from the grass-
roots. Political parties, which could articulate inter-
ests and possibly challenge the palace, were outlawed
as detrimental to national unity.
The panchayat system has remained the King's per-
sonal vehicle for the political and economic develop-
ment of Nepal-and for the preservation of royal
power. Although panchayat democracy gives the im-
pression of endorsing popular sovereignty, the US
Embassy contends it is almost totally subservient to
palace direction and manipulation. Before the recent
reforms, only the lowest (village) level was directly
elected. Higher councils were chosen by members of
subordinate panchayats or appointed by the King.
The system reinforced domination by Nepal's feudal
elite, but critical to its operation was the King's
ability to manipulate competing elite forces to remain
in overall control.
Partyless democracy remained largely unchanged af-
ter King Birendra assumed the throne upon his
father's death in 1972, but by 1979 the US Embassy
was reporting it was beginning to show signs of strain.
Popular frustration with the lack of movement toward
a more liberal political system, increased government
repression of the banned political parties, corruption
and inefficiency in government, and discontent with
flaws in the educational system triggered student-led
strikes and demonstrations in Kathmandu that quick-
ly won nationwide sympathy.
After violent confrontations in April and May 1979
between students and police in Kathmandu, King
Birendra suddenly announced that a national referen-
dum would be held to determine the future govern-
ment of Nepal. He thus gave the public a choice
between the existing partyless system with some
unspecified reforms or a multiparty alternative. The
King's concessions defused the crisis and launched
Nepal on a program of unprecedented, royally sanc-
tioned political reform.
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Appendix B
India-Nepal-China:
The Root Between Two Stones
Wedged between Asia's giants-India and China-
Nepal has traditionally preserved its freedom of ac-
tion by maintaining good relations with both countries
and occasionally by playing one against the other-a
policy Nepal calls equidistance. Strategically vulnera-
ble, Nepal has no leverage over either neighbor and
was once aptly referred to by an early king as a root
between two stones. Recognizing its impotence, Nepal
has concentrated on preserving and strengthening its
national sovereignty.
We believe India and China are unlikely to fight over
control of Nepal, but prolonged instability there could
lead to intervention by one or both powers and trigger
a serious confrontation. Judging by its past behavior,
India in particular would view with alarm any inter-
nal development-such as the fall of the monarchy-
that would create an exploitable political vacuum. We
believe India is unlikely to try to absorb Nepal,
despite pervasive Nepalese fears of this possibility.
Defense attache analysis concludes, however, that the
25,000-man Royal Nepal Army is strictly an internal
security force and could not withstand a major inva-
legitimate security concerns are bounded by the Hi-
malayas and have resisted initiatives that might re-
duce New Delhi's security options. We believe that
India interprets secret clauses in letters of exchange
that accompanied the 1950 Indo-Nepalese friendship
treaty as giving New Delhi the right to enter Nepal in
force if its security is threatened, with or without
Kathmandu's concurrence. Embassy reporting sug-
gests that India is largely resigned to the close and
friendly relations Nepal maintains with China but is
willing to tolerate only a moderate level of Chinese
sion.
Although Nepal maintains good relations with both
neighbors, we believe India remains Kathmandu's
major foreign policy preoccupation. India and Nepal
share a long open border and are inextricably linked
by historical, cultural, religious, and economic factors.
Indian influence is pervasive, and a former Nepalese
Prime Minister once described his country as not only
landlocked but "India-locked." India controls Nepal's
only access to the sea-a source of impressive eco-
nomic leverage, which New Delhi has used occasion-
ally to achieve political ends.
For several years King Birendra has been seeking
international recognition of Nepal as a zone of
peace-a mostly psychological defense of Nepalese
sovereignty in the context of India's regional suprem-
acy. The Constitution now includes the zone of peace
as a stated principle of Nepalese foreign policy, and
varying degrees of support for it have been wrung
from over 30 governments. The notable exception has
been India, which we believe is unlikely to endorse
any proposal that attempts to reduce its security
options south of the Himalayan frontier.
Indian policy toward Nepal is determined chiefly by
New Delhi's security interests along the sensitive
northern frontier with China, according to numerous
academic studies. Beginning with Nehru, Indian
Prime Ministers have publicly insisted'that India's
influence there.
We believe India's penetration of the Nepalese Gov-
ernment is considerable and that its growing political
and economic influence in the Terai area-a tradi-
tional hotbed of antiestablishment political activity in
Nepal-profoundly concerns Kathmandu. India shel-
tered and supported Nepali Congress Party elements
for several years after the royal coup of 1960,
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