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Nepal
>> Regional Overview >> Nepal Overview
Previous Years' Activities
2002, 2001, 2000, 1999, 1998
Last updated: 26
THE DEVELOPMENT CHALLENGE: Landlocked between India and China with some of the most rugged topography on earth, Nepal was never colonized and remained totally isolated from outside influence until 1951. Since opening its doors, Nepal has made a remarkable transition from an isolated medieval kingdom without the most rudimentary infrastructure to a modern nation state. In 1990, Nepal made a dramatic political transition from a traditional Kingdom to a modern constitutional monarchy.
However, Nepal's transformation has yet to reach many of its citizens in inaccessible mountain villages. Although its per capita income is $244, 42% of the population earns less than $100 per year. Poverty reduction is Nepal's overriding development challenge. Many of its social indicators are among the lowest worldwide. Nearly 40% of its population lack access to basic healthcare and education. Eighty percent of its citizens rely on subsistence agriculture, but only 20% of Nepal's rugged terrain is arable. Agricultural production can be expanded only through increasing irrigation and introducing improved technologies and seed varieties. Additionally, Nepal has abundant hydropower resources but has been unable to exploit it. As a result of its internal insurgency, the tourist industry and the manufacturing sector have suffered major setbacks, leading to rising unemployment Over the past 40 years, wars between Nepal’s largest neighbors—China, India, and Pakistan—have led to a steady influx of refugees on its northern and eastern borders.
More than half of Nepal's 23 million people live on less than a dollar a day. Nepal's relationship with India is complex. Nepal benefits from Nepali workers' remittances from India and the cheap goods and services that flow freely across its borders. However, the border is Nepal's only real conduit for the movement of goods and services and, on occasion, India has unilaterally restricted the free movement of goods.
The transition to democracy produced an array of leftist political parties. In 1994, one communist party faction withdrew from the political process. Vowing a Maoist revolution modeled on Peru's Shining Path, it pledged to end parliamentary democracy and bring down the economic system. The Government of Nepal (GON) retaliated with a police campaign that resulted in a number of human rights abuses. Starting in a remote rural section and employing classic Marxist strategy, the Maoists gained increasing control over rural areas, eventually establishing Maoist governments in five of Nepal's 75 districts, and then expanded their operations over much of the rural countryside. Maoist-affiliated unions and student groups shut down schools, exhorted money under the guise of "taxation," and successfully called nationwide strikes. Since 1994, over 2,000 people have been killed.
The GON has taken several bold steps to fight corruption, decentralize services, re-establish security, and win hearts and minds in conflict areas. These efforts have been thwarted by insufficient human and financial resources and by Maoist determination to drive out all GON presence in rural areas. Most recently, in November 2001, the Maoists unilaterally ended peace talks with the GON and immediately launched attacks across Nepal and in Kathmandu on the military, local and national police officials, and businesses. In response, the GON declared an official state of emergency, designated the Maoists as "terrorists," and authorized the deployment of the army.
U.S. national interests are well served with a developed, economically stable Nepal. The country is strategically important as a buffer zone between the two most populous nations—China and India—in a volatile region of the world. By supporting Nepal’s struggle to eliminate the underlying causes of its homegrown insurrection, the United States is making important contributions to regional stability and the global war on terrorism. USAID's proposed activities will provide timely and strategic assistance to help end this conflict and restore public confidence in government.
THE USAID PROGRAM: USAID will devote $27,597,000 in DA, $3,000,000 ESF, and $2,603,000 in P.L. 480 funds in FY 2002, and requests $31,696,000 DA and $6,000,000 ESF in FY 2003 for the four objectives described in the following Program Data Sheets. USAID provides affordable health and family planning services, promoting private sector development of hydropower, and strengthening democratic processes through selected government institutions, and ensuring the wise use and equitable distribution of natural resources. In addition, FY 2002 funds will be used to implement a new Special Objective for a program to mitigate the underlying causes of the growing Maoist insurrection.
ONGOING PROGRAMS FOR WHICH NO NEW FY 2002 OR FY 2003 FUNDING IS REQUESTED: The USAID program includes the following objective for which USAID is not requesting new funds, but is continuing to expend funds already appropriated.
Number: Title: Last Notified: Planned Completion: 367-001 Agriculture and Forestry FY 2002 CBJ, p. 303 FY 2002 OTHER PROGRAM ELEMENTS: USAID’s South Asian Regional Initiative (SARI) addresses regional issues, such as energy pricing and distribution (SARI/E) and trafficking of women and children (SARI/Q). Based in New Delhi, the Regional Urban Development Office (RUDO) provides funding to Kathmandu Metropolitan City to carry out a program on domestic and medical waste management. The USAID mission in Nepal will assist RUDO in the monitoring and coordinating the project. Another USAID-financed program in Nepal, is the Bureau for Economic Growth, Agriculture, and Trade’s Farmer-to-Farmer program, which provides experienced U.S. professionals to work on short-term specific agribusiness assignments with farmers.
OTHER DONORS: Bilateral donor assistance to Nepal amounts to approximately $450 million, and multilateral grant assistance is nearly $280 million annually. Japan and United States are the first and second largest bilateral partners, respectively. Other major bilateral donors include Denmark (energy, natural resources); United Kingdom (governance, rural infrastructure); Germany (rural development, health); Switzerland (rural development, infrastructure); Norway (energy, urban water supply); Netherlands (rural development); Finland (mapping, governance); and Canada (civil society). Major multilateral donors include the United Nations Development Program (agriculture, development administration, and industry); the World Bank; the Asian Development Bank; European Union; and World Food Program.
Program Data Sheets
- 367-002 Reduced Fertility and Protected Health of Nepalese Families
- 367-006 Increased Private Sector Participation and Investment in Environmentally and Socially Sustainable Hydropower Development
- 367-007 Strengthened Governance of Natural Resources and Selected Institutions
- 367-008 Restoring Political Stability and Expanding Confidence in Democracy
Country Background Information Resources
CIA Factbook
Library of CongressNational Geographic Country Maps
State Dept. Country Information
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Last Updated on: May 29, 2002 |
