History of Nepal
Nepal is one of the oldest kingdoms on earth. Its history is rooted in its location between two influential countries-- India and China . The influence of these countries, and that of Nepal 's Asian and Middle Eastern neighbors, has helped to shape Nepal 's cultural, political, and religious life. In fact, one of the region's most influential leaders was born in Nepal .
 
For most of Nepal 's history, the Kathmandu valley has been the cultural and political center of Nepal . Its fertile soil made it good for farming, so this land has been populated since Nepal 's earliest days. The valley's location along a trans-Himalayan trade route brought some wealth and much cultural influence to the area.
 
Among some of the early inhabitants of Nepal were the Tarai, who primarily lived in eastern Nepal . A Tarai prince born in 563 BC would ultimately leave his princely duties behind and become a god, quite literally. This prince's name was Siddhartha Gautama. Gautama gave up chasing after worldly possessions to search for spiritual truth. In doing so, he gained the name "The Enlightened One," or Buddha. Buddha, as you can probably guess, is the head of the Buddhist religion. Buddhism was the primary religion of Nepal for hundreds of years, until around 200 AD.
 
It was then that a group of people called the Licchavis invaded Nepal from northern India . The Licchavis introduced the Nepalese to the religion of Hinduism, one of the oldest religions in the world. To this day, Hindus and Buddhists worship side by side in Nepal , often in the same temples.
 
The age of the Licchavis was good for Nepal . During their rule, Nepalese art and culture flourished. The Licchavi era lasted more than 600 years. It ended in 879, when the Licchavis were replaced by the Thakuri dynasty. The Thakuris were not good for Nepal , and some even refer to the Thakuri years as Nepal 's Dark Ages. A few centuries later, a Thakuri king named Arideva turned Nepal 's fortune around. This was when he founded the Malla dynasty.
 
During the Malla dynasty, Nepal 's culture again improved. But it was at a price--during the Malla dynasty, Nepal broke into disagreeing city-states, and occasional wars between them broke out. The Malla kingdom was at its best around the 15th century. The rulers of the country's most eastern region, Gorkha, thought they could do a better job of leading Nepal , so they went to war with the Mallas. After 27 years of fighting, the Gorkhas won in 1768. They moved the capital of Nepal to Kathmandu (where it is today) and started growing the country's borders.

The rulers of Ghorkha, the most easterly region, had always coveted the Mallas' wealth. Under the inspired leadership of Prithvi Narayan Shah, the Ghorkha launched a campaign to conquer the valley. In 1768 - after 27 years of fighting - they triumphed and moved their capital to Kathmandu . From this new base the kingdom's power expanded, borne by a seemingly unstoppable army, until progress was halted in 1792 by a brief and chastening war with Tibet .

Further hostilities followed in 1814, this time with the British over a territorial dispute. The Nepalese were eventually put to heel and compelled to sign the 1816 Sugauli Treaty, which surrendered Sikkim and most of Terai (some of the land was eventually restored in return for Nepalese help in quelling the Indian Mutiny of 1857), established Nepal's present eastern and western boundaries and, worst of all, installed a British 'resident' in the country.

The Shah dynasty continued in power during the first half of the 19th century until the ghastly Kot Massacre of 1846. Taking advantage of the intrigue and assassinations that had plagued the ruling family, Jung Bahadur seized control by butchering several hundred of the most important men while they assembled in the Kot courtyard. He took the more prestigious title Rana, proclaimed himself prime minister for life, and later made the office hereditary. For the next century, the Ranas and their offspring luxuriated in huge Kathmandu palaces, while the remainder of the population eked out a living in medieval conditions.

The Rana's antiquated regime came to an end soon after WW II. In 1948, the British withdrew from India and with them went the Ranas' chief support. Around the same time, a host of insurrectional movements, bent on reshaping the country's polity, emerged. Sporadic fighting spilled onto the streets and the Ranas, at the behest of India , reluctantly agreed to negotiations. King Tribhuvan was anointed ruler in 1951 and struck up a government comprised of Ranas and members of the newly formed Nepali Congress Party.

But the compromise was shortlived. After toying with democratic elections - and feeling none too pleased by the result - King Mahendra (Tribhuvan's son and successor) decided that a 'partyless' panchaayat system would be more appropriate for Nepal . The king selected the prime minister and cabinet and appointed a large proportion of the national assembly, which duly rubber-stamped his policies. Power, of course, remained with only one party - the king's.

Cronyism, corruption and the creaming-off of lucrative foreign aid into royal coffers continued until 1989. The Nepalese, fed up with years of hardship and suffering under a crippling trade embargo imposed by the Indians, rose up in popular protest called the Jana Andolan or 'People's Movement'. In the ensuing months, detention, torture and violent clashes left hundreds of people dead. It all proved too much for King Birendra, in power since 1972. He dissolved his cabinet, legalised political parties and invited the opposition to form an interim government. The panchaayat system was finally laid to rest.

Birendra persevered with the Panchayat system, bolstered initially by the result of a referendum which gave a narrow majority in favor of its continued use. In the face of substantial and growing opposition, which increased steadily throughout the 1980s, Birendra resorted to a mix of repression, censorship and cosmetic administrative reforms to defuse the situation. In 1986, a member of the minority Newari community, Marich Man Singh Shrestha, became Prime Minister for the first time. Then, in 1990, growing public unrest forced the King to accept political parties and introduce a draft constitution allowing for direct elections to a bicameral parliament.

The first two polls under the new system, held in 1991 and 1994, were won by the Congress Party (linked to the Indian party of the same name) and the United Marxist-Leninist Party (UML) respectively. Both parties are rife with factional infighting with the result that Nepal lacked a truly stable government throughout the 1990s. The Congress Party was returned to office once again at the most recent poll in May 1999. Since then, Nepal has been consumed by more dramatic events.

The Maoist-inspired Nepalese Communist Party pulled out of constitutional politics in 1996 and launched an armed struggle, roughly akin to the campaign conducted by the Peruvian movement Sendero Luminoso. The guerrillas have attracted large-scale support from the impoverished peasantry and have an estimated 15,000 personnel under arms. Their leader is Pushpan Kamal Dahal, better known as ‘Comrade Prachanda', a Maoist ideologue who is based outside the country (probably in India ) along with most of the NCP political leadership.

In June 2001, the monarchy, the bedrock of the Nepali state, almost self-destructed through a bizarre and bloody incident when the heir apparent to the throne, Crown Prince Dipendra, went berserk in the royal palace and murdered several members of his immediate family - including King Birendra - before committing suicide. The senior remaining Royal, Gyanenda, assumed the throne. The new monarch lacked the popularity of his predecessor amongst ordinary Nepalese and, along with his government, faced some formidable problems, including the Maoist insurgency, a squabbling parliament and a very weak economy.

He also inherited a new Prime Minister, Sher Bahadur Deuba, after his predecessor, the deeply unpopular Girija Prasad Koirala was forced out of office. By late 2002, there had been little improvement on any front. The Maoists controlled much of the countryside and had established their own state-within-a-state in the western Nepal ; their insurgency spread to the capital also. In addition, the collapse of the tourist sector was undermining the whole economy. In October 2002, Gyanendra sacked premier Deuba and the Cabinet, and assumed some executive powers himself. National elections due for mid-November were postponed. The Nepali government now began negotiations with the rebels, and managed to reach an accord on political reforms and a new constitution. In January 2003, the rebels announced a ceasefire. This held until the following September, by which time the Nepali government was in disarray, mainly due to profound disagreements over negotiating strategy. Nepal had its third prime minister in nine months: Surya Bahadur Thapa was appointed to the post by King Gyanendra in mid-2003 following his predecessor's failure to form a government. Almost farcically, Thapa also resigned in May 2004, after weeks of street protests by opposition groups against his Royalist stance, only for Sher Bahadur Deuba to be reinstated by the king. The violence of the rebels has not abated; indeed, it culminated, as of August 2004, in a week-long blockade of Kathmandu . This sorry affair was sadly complemented by the hostage-taking of 12 Nepalese citizens in Iraq , later murdered by their captors.

On February 1 2005, King Gyanendra caused global shock when he sacked - for the second time - the Nepali government, kept politicians under strict surveillance, curtailed press freedoms and declared a state of emergency. Since assuming direct control, he has sought to appoint a mainly pro-monarchist cabinet. King Gyanendra claimed that the former government under prime minister Sher Bahadur Deuba had failed to restore peace and quell the Maoist insurgency in the face of imminent elections. The country is now enduring controversial press restrictions, with some newspapers even deliberately leaving their pages blank as a muted form of protest. There are concerns that the King may be seeking to impose an Absolute Monarchy in Nepal . Although the Maoist insurgency have also been responsible for gross injustices and violations of peace (reputedly having killed more civilians than soldiers), there are worries that King Gyanendra's latest maneuver will only strengthen the insurgency by highlighting the ineffectiveness of democracy and the downfalls of a monarchy that asserts interventionist power. It is hoped that the UN commission on human rights, who have sent an investigator to Nepal , could influence the King into retracting his latest actions. King Gyanendra has assured the world that his measures are only temporary and that he wishes to re-install democracy within three years.

Nepal has fewer immediate problems abroad. Relations with India , which reached crisis point during the mid-1990s, when the Indians imposed a trade embargo, have since improved. Outstanding border disputes have been settled (as with the Makhali River basin ) or are in abeyance. Relations with Nepal 's other large neighbor, China , have also been good. Nepal is still coping with up to 100,000 refugees who crossed the border from its third immediate neighbor, Bhutan , to escape political strife in their own country. But all of Nepal 's neighbors are concerned about the consequences of the widening insurgency and the possible fall-out. King Gyanendra may have severely hampered relations with his neighbors by his recent actions and it remains to be seen how the issue will be resolved.

Government
Nepal is a constitutional monarchy. Although more power has been vested in the monarch than is customary under such a system, the main center of legislative and executive power is the bicameral parliament comprising the 205-seat Pratinidhi Sabha (House of the States), whose members are directly elected to serve a five-year term, and the 60-seat Rashtriya Sabha (House of States). At present, as of March 2005, the situation remains unstable following King Gyanendra's sacking of government; consequently, information here may be incorrect.

Economy
Nepal is one of the world's least developed countries with an average annual income of just US$200 per annum. Although little of the land can be cultivated, 90 per cent of the working population finds employment in agriculture and forestry. Foodstuffs and live animals provide about 30 per cent of Nepal 's export earnings. The principal crops are maize, rice, barley, wheat, sugar cane, potatoes and fruit. The manufacturing sector is very small and concentrated in light industries such as construction materials, food processing, textiles and carpet-making (the latter being an important export earner).

The country has a considerable hydroelectric potential which would save Nepal from having to import much of its energy requirements, but the sector is as yet underdeveloped. There is some mining of mica and small quantities of lignite, copper, coal and iron ore. The main service industry, tourism, has gone into decline since the late 1990s. In 2002, bad weather and the effects of the Maoist insurgency caused the economy to contract by 0.5 per cent. The sustained expansion of the 1990s has clearly ended and the Nepalese economy is highly vulnerable. It relies on substantial amounts of foreign aid, especially food aid (international donors provide about 30 per cent of the government's budget) and runs a large external debt. India is the main trading partner, although following the 1989/90 dispute which led to the closure of the border between the two countries, Nepal has actively pursued trade links elsewhere. Agreements have also been signed with several other governments, of which that with China (PR) is the most important. Nepal is a member of the Asian Development Bank and the Colombo Plan, both of which aim to promote regional economic cooperation.