Nepal is a small and mountainous kingdom wedged between the two great Asian powers of India and China, and this geographical location has been a determining factor in shaping Nepal's history and politics. Nepal is the only Hindu kingdom in the world, yet a significant number of Nepali living in the Hills region trace their origins to Tibet and adjacent regions that are a part of China. Nepal's ethnic, linguistic, and regional heterogeneity has generated a great deal of political and social strife in modern times. Remote Nepal escaped colonial exploitation but missed out on the modernizing influences that integration into larger colonial markets brings.

Landlocked Nepal cannot ignore the interests of its larger neighboring states and must depend on their good will for trade and transit connections to the outside world. With a population of 27 million in 2004, Nepal is one of the poorest countries in the world...