During the late 18th-early 19th centuries, the principality of Gorkha united many of the other principalities and states of the sub-Himalayan region into a Nepalese Kingdom. Nepal retained its independence following the Anglo-Nepalese War of 1814-16 and the subsequent peace treaty laid the foundations for two centuries of amicable relations between Britain and Nepal. (The Brigade of Gurkhas continues to serve in the British Army to the present day.) In 1951, the Nepali monarch ended the century-old system of rule by hereditary premiers and instituted a cabinet system that brought political parties into the government. That arrangement lasted until 1960, when political parties were again banned, but was reinstated in 1990 with the establishment of a multiparty democracy within the framework of a constitutional monarchy.An insurgency led by Maoists broke out in 1996. The ensuing 10-year civil war between Maoist and government forces witnessed the dissolution of the cabinet and parliament and the re-assumption of absolute power by the king in 2002. A peace accord in 2006 led to the promulgation of an interim constitution in 2007. Following a nationwide Constituent Assembly (CA) election in 2008, the newly formed CA declared Nepal a federal democratic republic, abolished the monarchy, and elected the country's first president. After the CA failed to draft a constitution by a May 2012 deadline set by the Supreme Court, then-Prime Minister Baburam BHATTARAI dissolved the CA. Months of negotiations ensued until March 2013 when the major political parties agreed to create an interim government headed by then-Chief Justice Khil Raj REGMI with a mandate to hold elections for a new CA. Elections were held in November 2013, in which the Nepali Congress won the largest share of seats in the CA and in February 2014 formed a coalition government with the second place Communist Party of Nepal-Unified Marxist-Leninist and with Nepali Congress President Sushil KOIRALA as prime minister. Nepal's new constitution came into effect in September 2015, at which point the CA became the Legislature Parliament. Khagda Prasad Sharma OLI served as the first post-constitution prime minister from October 2015-August 2016, when a new coalition led by Maoist leader Pushpa Kamal DAHAL (aka “Prachanda”) took over the premiership. The constitution provides for a transitional period during which three sets of elections – local, provincial, and national – must take place before 21 January 2018. The government scheduled local elections, the first in 20 years, for May 2017.
Nepal is among the poorest and least developed countries in the world, with about one-quarter of its population living below the poverty line. Nepal is heavily dependent on remittances, which amount to as much as 30% of GDP. Agriculture is the mainstay of the economy, providing a livelihood for almost two-thirds of the population but accounting for only one-third of GDP. Industrial activity mainly involves the processing of agricultural products, including pulses, jute, sugarcane, tobacco, and grain.Nepal has considerable scope for exploiting its potential in hydropower, with an estimated 42,000 MW of commercially feasible capacity. Nepal and India signed trade and investment agreements in 2014 that increase Nepal’s hydropower potential, but political uncertainty and a difficult business climate have hampered foreign investment.Nepal was hit by massive earthquakes in early 2015, which damaged or destroyed infrastructure and homes and set back economic development. Political gridlock in the past several years and recent public protests, predominantly in the southern Tarai region, have hindered post-earthquake recovery and prevented much-needed economic reform. Additional challenges to Nepal's growth include its landlocked geographic location, persistent power shortages, and underdeveloped transportation infrastructure.