Nepal

Landlocked in southern Asia, Nepal is strategically located between China and India. In size it is a little bigger than the state of Arkansas, it is also the only official Hindu state in the world with 80% percent of the population being followers, and it is as of 2010 the most recently declared republic in the world. Nepal currently has almost one-third of its population living below the poverty line. Agriculture is the mainstay of the economy, providing a livelihood for three-fourths of the population and accounting for about one-third of GDP. Primary spoken language is Nepali accounting for roughly 50% of the population. In 1951, the Nepalese monarch ended the century-old system of rule by hereditary premiers and instituted a cabinet system of government. Reforms in 1990 established a multiparty democracy within the framework of a constitutional monarchy. An insurgency led by Maoist extremists broke out in 1996. The ensuing ten-year civil war between insurgents and government forces witnessed the dissolution of the cabinet and parliament and assumption of absolute power by the king. Several weeks of mass protests in April 2006 were followed by several months of peace negotiations between the Maoists and government officials, and culminated in a November 2006 peace accord and the promulgation of an interim constitution. Following a nation-wide election in April 2008, the newly formed Constituent Assembly declared Nepal a federal democratic republic and abolished the monarchy at its first meeting the following month. The Constituent Assembly elected the country's first president in July. The Maoists, who received a plurality of votes in the Constituent Assembly election, formed a coalition government in August 2008, but resigned in May 2009 after the president overruled a decision to fire the chief of the army staff. Nepal has considerable scope for exploiting its potential in hydropower, with an estimated 42,000 MW of feasible capacity, but political instability hampers foreign investment. Additional challenges to Nepal's growth include its technological backwardness, landlocked geographic location, civil strife and labor unrest, and its susceptibility to natural disaster. Joint border commission continues to work on contested sections of boundary with India, including the 400 square kilometer dispute over the source of the Kalapani River; India has instituted a stricter border regime to restrict transit of Maoist insurgents and illegal cross-border activities; approximately 106,000 Bhutanese Lhotshampas (Hindus) have been confined in refugee camps in southeastern Nepal since 1990. Going forward, the Himalayan watershed, which provides water for nearly a third of the worlds population, exists almost entirely inside Nepali boundaries. As India, China, and Pakistan continue to grow and the glaciers supporting the watershed shrink, foreign influence will play a significant role in the development of a stable government