"A landlocked Himalayan kingdom between India and China, Nepal ranks among the world's poorest countries. In 1990, following a democratization movement, Nepal became a parliamentary democracy under a constitutional monarch. Although this led to a process of economic restructuring and market liberalization, political instability and years of increasingly dire internal security challenges have undercut the country's economic growth and reform efforts. Compounding the country's difficulties was the June 2001 tragedy in which ten members of the royal family, including King Birendra, were killed in an assassination-suicide, reportedly carried out by Crown Prince Dipendra. The murdered king's younger brother, Gyanendra, now occupies the throne. In a reversal of the longer-term trend towards a democratic constitutional monarchy, King Gyanendra declared a state of emergency, assumed full powers, suspended civil liberties and placed opposition leaders under arrest on February 1, 2005. The King explained his move as necessary to fight the Maoist insurgency. Human rights advocates are concerned that opposition leaders may 'disappear' while in custody. U.S. foreign policy towards Nepal has provided development and security assistance while seeking to promote democracy and human rights."
CRS Report for Congress, RL31599