ABSTRACT
This chapter examines Nepal’s strategic evolution as a small state in the post-Cold War era, addressing its economic liberalisation, political transitions and foreign policy amidst regional and global shifts. It highlights Nepal’s adoption of neoliberal reforms in 1992 to attract investment and reduce inefficiencies, exposing vulnerabilities such as dependency on India, limited industrial growth and weak institutions. The analysis delves into Nepal’s transition from a monarchy to a federal secular republic compounded by decade-long civil war, shaped by demands for inclusivity and external influences, from near and extended neighbourhood. Events like the 2015 earthquake and India’s subsequent unofficial economic embargo underscored Nepal’s geopolitical fragility and the urgency to diversify partnerships. Nepal’s participation in China’s Belt and Road Initiative and the US-led Millennium Challenge Corporation illustrates its balancing act amidst great power rivalry, sparking nationalistic debates over sovereignty and dependency. This chapter concludes by advocating for strengthened institutions, transparent diplomacy and strategic autonomy to navigate Nepal’s challenges and assert its agency in a competitive geopolitical environment.
