	Nepal: Recent Developments

Nepal has undergone a radical transformation in recent years as the nation ended its civil war, abolished the monarchy, and established a multi-party democratic republic. Before February 2011, Nepal had been in a political vacuum for seven months due to a deadlock in the Constituent Assembly, where no party or coalition was able to attain majority support. They elected Khanal as prime minister, with backing from the Maoists, though the Maoists remained outside the government until March 2011. The government faces the challenge of completing the peace process that began in 2006 by drafting a constitution before a May 2011 deadline. Conclusion of the Peace Process and Integration of Maoist Fighters

One of the key provisions of the 2006 peace agreement that ended a decade-long guerrilla struggle and brought the Maoists off the battlefield and into the political process was a provision which has led to great debate over how and to what extent former Maoist fighters will be integrated into the Army of Nepal. UNMIN had been monitoring the situation since January 2007. Federalism and the Madhes and Tharu of the Terai

The likely contentious nature of a new federal structure may lead the government and constitution drafting committees to defer the issue of a new federal system to a later date, at which time the polity of Nepal may be better able to absorb the shock of potential opposition to a new structure. This background provides a context for assessing the stability of the current government, which once again includes these two communist parties. The seizure of power by the king appears to have been aimed as much, if not more so, at asserting the king's control over democratic forces. The Seven Party Alliance that opposed the king in April included the parties as listed below:
The Nepali Congress (NC) Communist Party of Nepal Unified Marxist Leninist (CPN-UML) Nepali Congress (Democratic) or NC (D) Nepal Sadbhavana Party (Anandi Devi) or NSP (A) Jana Morcha Nepal Samyukta Baam Morcha (United Left Front) or ULF Nepal Workers and Peasants Party (NWPP)
The Maoists were not part of the Seven Party Alliance, though they worked with the alliance to oppose the monarchy. The June election date slipped but Constituent Assembly elections were eventually held in April 2008. This has been particularly acute in the Terai region along Nepal's southern border with India, where the Madhes live. Political instability and insurgency-related violence of recent years has undermined the country's economy. Relations with the United States

According to the State Department Background Notes on Nepal,
U.S. policy objectives toward Nepal center on helping Nepal build a peaceful, prosperous, and democratic society. U.S. Foreign Assistance

U.S. assistance to Nepal has sought to help Nepal "cement recent gains in peace and security" and assist Nepal in its transition to democracy, including strengthening Nepal's democratic institutions. Geopolitical Setting

Nepal is a landlocked geopolitical buffer state, like Bhutan, that is caught between the two Asian giants, India and China. Some sectors of the Nepali leadership have long resented Indian economic influence and have sought to establish a more independent foreign policy, which could draw Nepal closer to China. China

China has several key interests in Nepal.
Nepal has undergone a radical political transformation since 2006, when a 10-year armed struggle by Maoist insurgents, which claimed at least 13,000 lives, officially came to an end. The country's king stepped down in 2006, and two years later Nepal declared itself a republic, electing a Constituent Assembly in 2008 to write a new constitution, which is currently being drafted. Though the process of democratization has had setbacks and been marked by violence at times, Nepal has conducted reasonably peaceful elections, brought former insurgents into the political system, and in a broad sense, taken several large steps towards entrenching a functioning democracy.
This still-unfolding democratization process makes Nepal of interest to Congress and to U.S. foreign policymakers. A Congressional Nepal caucus has been newly formed, which should help further strengthen relations between the two countries, which have traditionally been friendly. U.S. policy objectives toward Nepal include supporting democratic institutions and economic liberalization, promoting peace and stability in South Asia, supporting Nepalese territorial integrity, and alleviating poverty and promoting development.
Nepal's status as a small, landlocked state situated between India and China also makes it important to foreign policymakers. Nepal's reliance on these two giant neighbors leads it to seek amicable relations with both, though ties with India have historically been closer. Some believe India is concerned a Maoist regime in Nepal could lend support to Maoist rebels in India. China, meanwhile, has taken several steps to pressure Nepal to repatriate, or at least constrain the activities of, refugees crossing the border from Tibet.
The place of Nepal's Maoists remains a delicate question that will do much to determine the fate of the nation's democracy. The group surprised many by peacefully challenging, and winning, the April 10, 2008, Constituent Assembly elections. During the civil war, the Maoists' stated aim had been to establish a peasant-led revolutionary communist regime, but once part of the political process, their objectives appear to have moderated. They have since lost control over government, and then returned as part of a coalition led by the Communist Party of Nepal United Marxist Leninist (CPN-UML).
Two key challenges presently face Nepal. The first is to complete the peace process, which would require a resolution of the difficult issue of how to integrate former Maoist fighters into the army, or into society. The second key challenge is completing the drafting of a constitution. This raises the question of establishing a new federal structure that would address grievances of groups that feel they have been underrepresented in the key institutions of the state, particularly in the Terai region bordering India.