No country in South Asia shares as close a bond with India as Nepal does. Geography, shared history and ethnicity have facilitated the development of strong ties between the two countries. India is vitally important to Nepal for its economic survival, while India considers Nepal a central element in its regional security complex. Unlike many developing countries today, Nepal was never directly colonized by Europeans. It is the oldest state in South Asia, created as a result of military campaigns undertaken by the Gorkha king Prithvi Narayan Shah. He became the first ruler of the Shah dynasty that was established after the unification of different kingdoms and principalities in 1768 CE. Prithvi Narayan was the first to recognize Nepal’s geopolitical constraints. Declaring that Nepal was like “a yam between two stones,” he propounded a policy of political neutrality in its foreign policy with regard to British India and Imperial China (Shaha 1978: 104). For the most part, successive governments in Nepal (both monarchy-led and democratically elected) have attempted to maintain neutrality with respect to its two giant neighbors. The Kingdom of Nepal expanded in size from 1768-1814 CE. During this time, it invaded Tibet to the north and came into conflict with the Qing dynasty in China. However, the Nepalese were defeated in 1791 CE effectively ending any further expansion of the kingdom to the north. In 1814 CE, it entered into a conflict with another expansionist power to the south, the English East India Company. Again, the Nepalese were defeated. Britain and Nepal signed the Treaty of Sugauli in 1815 CE, which required Nepal to cede one-third of its territory, including Sikkim, Kumaon and Garhwal region, Kangra valley and parts of the Terai region in the south. Most of these regions are now part of India. Britain would control Nepal’s defense and foreign affairs, while allowing the monarchy to retain internal sovereignty. Relations between Britain and Nepal were cordial, with the kingdom even extending assistance to the British during the Indian sepoy mutiny in 1857 CE. In 1950, a newly independent India and Nepal concluded the Treaty of Peace and Friendship that was to set the framework for bilateral relations over the next sixty years. Prime Minister Nehru’s government recognized Nepal’s importance to India’s security and wanted to maintain colonial-era arrangements that would allow India to influence Nepal’s security and foreign policy decisions. India’s
active role in Nepalese politics over the next few decades was resented by Nepalese nationalists keen to chart an independent path by establishing strong relations with extra-regional powers, including China. In response, India has attempted to pressure Nepal to limit its contacts with outside powers. These developments created tensions between the two countries from time to time.