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3407
17 JUL iSR,
NIE 38.1-61
11 July 1961
NATIONAL INTELLIGENCE ESTIMATE
NUMBER 38.1-61
(Supersedes Relevant Portions of NIE 55-59)
THE OUTLOOK FOR NEPAL
Submitted by the
DIRECTOR OF CENTRAL INTELLIGENCE
The following intelligence organizations participated in the
preparation of this estimate: The Central Intelligence Agency
and the intelligence organizations of the Departments of State,
the Army, the Navy, the Air Force, and The Joint Staff.
Concurred in by the
UNITED STATES INTELLIGENCE BOARD
on 11 July 1961. Concurring were The Director of Intel-
ligence and Research, Department of State; the Assistant
Chief of Staff for Intelligence, Department of the Army; the
Assistant Chief of Naval Operations (Intelligence) , Depart-
ment of the Navy; the Assistant Chief of Staff, Intelligence,
USAF; the Director for Intelligence, Joint Staff; the Assistant
to the Secretary of Defense, Special Operations; and the
Director of the National Security Agency. The Atomic Energy
Commission Representative to the USIB, and the Assistant
Director, Federal Bureau of Investigation, abstained, the sub-
ject being outside of their jurisdiction.
DOCUMENT NO.
NO CHANGE IN CLASS. t
DECLASSiriED
CLASS. CHANGED TO: TS S C
NEXT REV;EW DATE.
AUTH: HR -..7c4-2
DATE:? Y.) REVIEWER: a 0
N? 362
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CENTRAL INTELLIGENCE AGENCY
DISSEMINATION NOTICE
1. This estimate was disseminated by the Central Intelligence Agency. This copy
is for the information and use of the recipient and of persons under his jurisdiction on
a need to know basis. Additional essential dissemination may be authorized by the
following officials within their respective departments.
a. Director of Intelligence and Research, for the Department of State
b. Assistant Chief of Staff for Intelligence, Department of the Army
c. Assistant Chief of Naval Operations (Intelligence) , for the Department of
the Navy
d. Director of Intelligence, USAF, for the Department of the Air Force
e. Director for Intelligence, Joint Staff, for The Joint Staff
f. Director of Intelligence, AEC, for the Atomic Energy Commission
g. Assistant Director, FBI, for the Federal Bureau of Investigation
h. Assistant to the Secretary of Defense, Special Operations, for the Department
of Defense
i. Director of NSA for the National Security Agency
j. Assistant Director for Central Reference, CIA, for any other Department or
Agency
2. This copy may be retained, or destroyed by burning in accordance with applicable
security regulations, or returned to the Central Intelligence Agency by arrangement
with the Office of Central Reference, CIA.
3. When an estimate is disseminated overseas, the overseas recipients may retain it
for a period not in excess of one year. At the end of this period, the estimate should
either be destroyed, returned to the forwarding agency, or permission should be requested
of the forwarding agency to retain it in accordance with IAC-D-69/2, 22 June 1953.
4. The title of this estimate when used separately from the text should be classified:
FOR OFFICIAL USE ONLY
WARNING
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
DISTRIBUTION:
White House
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THE OUTLOOK FOR NEPAL
THE PROBLEM
To estimate probable developinents in Nepal and in Nepal's relations with India,
the Communist countries, and the West during the next few years.
CONCLUSIONS
1. Nepalese political developments in the
near future are likely to be centered on
the conflict between King Mahendra and
the Nepali Congress Party exile move-
ment. The King has not demonstrated
the qualities of leadership necessary for
the difficult tasks that face him. Never-
theless, he has a number of factors in his
favor, notably his control of the country's
security forces. (Paras. 8-14)
2. The Nepali Congress exile movement,
which is led by former Deputy Prime Min-
ister Subarna Shumshere, has developed
only limited strength to date in its cam-
paign to end the King's direct rule. Most
of the party's leaders, including former
Prime Minister B. P. Koirala, are under
arrest. However, the Nepali Congress is
in the best position to take advantage of
the political unrest that is likely to de-
velop under the King's rule, but its ability
to do so will depend on its success in se-
curing army support or passivity. The
10,000 man army presently appears loyal
to the King, but if faced with continued
political deterioration the army might
throw its support to the Nepali Congress,
seize power itself, or force the King to
compromise with the opposition move-
ment. Considering all factors, Mahen-
dra's government is unlikely to remain in
power beyond another year or two.
(Paras. 15-16, 18-19)
3. The Communist Party of Nepal has a
limited but growing ability to influence
events in Nepal. The party has let
the Nepali Congress take the initiative
against the King while it concentrates on
improving its organization and infiltrat-
ing governmental and other organiza-
tions. Conditions in Nepal will provide
growing opportunities for the Nepalese
Communists. (Paras. 17, 20)
4. Nepal has had little success in devel-
oping its subsistence economy to date,
and the outlook for any significant eco-
nomic growth during the next few years
is poor. Its development efforts will con-
tinue to be almost entirely dependent on
foreign aid. However, a lack of economic
progress is unlikely to have serious politi-
cal repercussions in the near future.
(Paras. 21-23)
1
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5. Virtually all Nepalese leaders are con-
vinced that Nepal should follow a neu-
tralist foreign policy, particularly in the
UN. Mahendra, however, is more suspi-
cious of India than are the Nepali Con-
gress leaders, and is likely to continue to
follow a more cooperative though still
cautious policy toward Communist China,
which the Chinese Communists have re-
ciprocated. The King appears convinced
that he can use the threat of reliance on
the Chinese to keep India from gaining
too strong an influence in Nepal. (Paras.
24-26)
6. India's major interest in Nepal is to
preserve the country's integrity as a key
element in the Indian security position.
2
India is likely to encourage Mahendra to
reach a compromise with the Nepali Con-
gress, although in the event of an ex-
tended struggle Indian support is likely
to be increasingly engaged on the side of
the Nepali Congress. Nevertheless, we
believe that 'India will pursue a cautious ?
course for fear that Mahendra, if pushed
too far, might rely more heavily on Chi-
nese support to stay in power. (Paras.
27-28)
7. Nepalese relations with the West are
likely to remain relatively good. Nepal
will continue to rely on the US for sub-
stantial aid for its development program.
(Para. 29)
DISCUSSION
8. King Mahendra's abrupt dismissal of the
Nepali Congress Party Government in Decem-
ber 1960 ended the country's first brief ex-
periment with representative government.
This experiment followed eight years of highly
unstable government during which the King
sometimes ruled directly and sometimes
through political leaders of his choosing. The
King eventually decided to accommodate the
growing pressure for representative govern-
ment, and Nepal's first national elections were
held in mid-1959. The Nepali Congress Party,
a moderate socialist party composed mainly
of small landholders and middle class ele-
ments, won two-thirds of the parliamentary
seats and took office under Prime Minister
Koirala.
9. The division of power between the King?
who retained extensive powers under the con-
stitution?and the Nepali Congress Party Gov-
ernment made friction almost inevitable.
However, during the first year after the elec-
tions both sides appeared aware of the need
for cooperation to prevent a return of politi-
cal instability. The government took some
promising steps in the direction of social and
economic reform. However, Prime Minister
Koirala offended the King who came to feel
that the Nepali Congress had designs against
the monarchy itself. Meanwhile, the "palace
clique," composed mainly of .landowners who
feared the Nepali Congress land and tax re-
form programs, was able, to play on the King's
fears that he would lose his dominant position
unless he moved against the government lead-
ers. Mahendra began to harass the govern-
ment in various ways. He acted secretly and
swiftly on 15 December by ordering the arrest
of most of the government and opposition
leaders including Prime Minister Koirala, dis-
missing Parliament, and resorting to direct
rule. The Nepali Congress leaders who were
able to avoid arrest went to India where they
have established an exile movement aimed at
their return to power. Nepalese political de-
velopments in the near future are likely to
be centered on this conflict.
10. The problems involved in governing Nepal
as it attempts to make the transition from
an isolated medieval society to a modern state
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are formidable. Nepal's geographic and ethnic
divisions make it difficult for any government
to develop a national consciousness and estab-
lish firm control over the entire country.1 The
country has few readily exploitable resources,
and the lack of administrative talent is a
major handicap to any efforts to modernize
the country. Less than five percent of the
people are literate. Nepal's location between
India and Communist China severely limits
its freedom of maneuver in international af-
fairs. Finally, the failure of the King and the
political parties to work out a satisfactory
relationship indicates that force and intrigue
will be the major determinants of future po-
litical trends.
The King's Position
11. King Mahendra has never demonstrated
the qualities of leadership necessary for the
difficult tasks that face him. Although the
41-year-old monarch is shrewd at playing off
one group against another, he is an unin-
spiring leader and a poor administrator with
only limited knowledge of political and eco-
nomic matters. He has so far been unsuc-
cessful in his attempts to obtain the services
of capable officials. The five members of the
Council of Ministers he has chosen to assist
him are distinctly second-rate and not par-
ticularly loyal to him. In any case, his basic
problem will remain to plague him, i.e., the
need to give his Ministers adequate power to
govern effectively without allowing them to
achieve a position which would threaten his
control.
'Nepal consists of three major areas: the Terai or
plains country in the south, the lower mountains
and valleys stretching across central Nepal, and the
high Himalayan ranges in the north. The country
is further divided by north - south ranges, which
make Nepal's transportation and communications
problems extremely difficult and limit the central
government's authority in large parts of the coun-
try. The people of the Terai?about one-third of
the estimated 9,000,000 population?are ethnically
similar to the people of north India. The popula-
tion of central Nepal?about half of the total?is
a mixture of Indian and Mongoloid, and the peo-
ple of the sparsely settled northern areas are
ethnically and culturally closer to the Tibetans than
to the other Nepalese.
3
12. The King's rule has slowed even the mod-
erate rate of progress achieved before the coup.
Mahendra has talked of formulating plans
to provide limited self-government from the
village upwards, while maintaining control
through close supervision of the process. He
would like to carry out certain social and
economic reforms, but since December he has
devoted his major attention to maintaining in-
ternal security. This preoccupation with se-
curity has already caused him to carry out
an extensive purge and reorganization of the
civil service, which has reduced its already
limited ability to administer the country.
13. At the same time, the King's personal
rule is supported by a number of important
factors. His demonstrated determination to
retain his dominance is in itself a considerable
asset. Respect for the monarch, regarded by
many as a reincarnation of a Hindu deity, is
widespread among the people. Political
apathy, still prevalent despite the growing
popular involvement in political life during
the last decade, probably is equally important.
Landlords and local officials generally support
the monarchy, although these elements have
recently become somewhat apprehensive be-
cause of Mahendra's talk of the need for re-
forms. The most important element of the
King's power, however, is his control of the
country's security forces.
14. Nepal's 10,000 man army is the key unit
of the country's security forces, as the 3,500
man armed police force can do little more
than carry out its routine law and order func-
tions.2 The army is poorly equipped and led
even by Asian standards despite nearly a
decade of effort by an Indian training mission.
The army consists of 9 infantry battalions and
9 separate companies, though the latter are
generally ineffective. Six of the 9 battalions?
including 2 battalions of specially selected
troops which comprise the Palace Guard?
are located in the Katmandu Valley. One
battalion is dispersed throughout central
Nepal, and the remaining two battalions are
in the lowlands along the Indian border.
2 The Militia, a paramilitary organization of com-
pany-sized units controlled by District Governors,
is generally ineffective.
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Detached units are scattered elsewhere
throughout the country. Logistical difficul-
ties are a major obstacle to troop deployment
beyond the key centers of population. The
army has the capability of quelling most civil
disorders that are beyond the ability of the
police to control, but probably is not capable
of putting down widespread or, major dis-
turbances.3
The Opposition Forces
15. The major opposition to the King comes
from the Nepali Congress leaders who are in
India, since the Nepali Congress units in Nepal,
though largely intact, are inactive. With
Koirala in jail the exile movement is led by
former Deputy Prime Minister Subarna Shum-
shere, who has long been the party's principal
financier. While he lacks Koirala's personal
popularity, he is a widely respected and ca-
pable leader. The active party workers in
India?which apparently number a few hun-
dred at present?come from the ranks of Nep-
alese students and other residents in north-
ern India. Some elements of the conservative
Gurkha Parishad, which emerged from the
1959 elections as the second strongest party
in Nepal, are also active in the exile movement,
as well as members of some minor parties.
The opposition movement apparently has re-
ceived only moral sympathy and advice?in
addition to the right of political asylum?from
the Indian Government, but it has received
limited support from the Praja Socialist Party
of India. The opposition also has been at-
tempting to obtain support?including arms?
from other countries, notably Burma and
Israel.
16. The movement has developed only limited
strength to date, although it apparently has
sufficient resources to support its present level
of activities. It has been able to maintain
contact with local units of the Nepali Con-
gress inside Nepal, and has carried out some
The Nepalese Army is less successful than the
British and Indian Armies in its recruiting efforts
among the hill peoples?commonly referred to as
Gurkhas?in view of the greater rewards and pres-
tige that result from service in the British and
Indian Armies. The Nepalese Army also includes
non-Gurkha elements.
propaganda activities against the King in
various parts of the country. While its or-
ganization is the most widespread of any Nep-
alese party, it probably has suffered some-
what from the King's repression since last
December. A more serious weakness is its
inability to secure enough arms to provide a
reasonable chance of ending the King's direct
rule.
17. The Communist Party of Nepal (CPN) ,
which won only eight percent of the votes in
the 1959 elections, has a limited but growing
ability to influence events in Nepal. The
party, which is aided by the Soviet and Chi-
nese Embassies in Katmandu?and to a lesser
extent by the Indian Communist Party?has
its principal strength in the Katmandu Valley
and eastern Nepal. Its membership is prob-
ably no greater than 8,000. Nevertheless, this
represents a fairly rapid growth over the past
two years. Since December the CPN has been
aided by the relative freedom permitted the
party despite the ban on political parties by
King Mahendra, who may view the party as
a counterweight to the Nepali Congress. The
party has traditionally suffered from serious
factionalism, however, and has been divided
on the policy to pursue since December. One
faction wanted to join with the Nepali Con-
gress in opposing the King, while the other
thought that Mahendra's "feudal" rule would
eventually provide greater opportunities for
the party to exploit. Since the Nepali Con-
gress has refused?at least for the present?
to cooperate with the CPN, the latter has so
far left the initiative for any widespread agita-
tion against the King to the Nepali Congress.
At the same time, it is steadily seeking to
infiltrate governmental and other organiza-
tions. Thus it hopes to be able to exploit
any instability caused by a Nepali Congress
insurrection without running the risk of being
suppressed should the agitation fail.
Political Outlook
18. King Mahendra has admitted to the US
Ambassador that things are not going well.
He is aware of the danger that a prolonged
period of direct rule might make him the focus
of popular discontent, and probably will make
new efforts to obtain the support of more ca-
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?Tztlibakiiica=
pable and representative political figures. He
has made unsuccessful overtures to Subarna
Shumshere, apparently in an attempt to se-
cure the latter's services and thus split the
Nepali Congress Party. We believe Subarna
is unlikely to cooperate with the King unless
Koirala and the other Nepali Congress leaders
are freed and Parliament restored. While Ma-
hendra might eventually see no alternative
to such a compromise, he is unlikely to con-
sent to such conditions in the near future,
partly out of fear for Koirala's popularity, but
also because such a retreat would mean a
drastic reduction in his power. Therefore the
King is likely to attempt to secure the services
of the leaders of other parties, such as the
Gurkha Parishad, but even if he experiences
some success along these lines this will not
prevent an increase in political unrest and
economic deterioration.
19. The Nepali Congress is in the best posi-
tion to take advantage of this situation, but
its ability to do so will depend on its success
in securing some army support?or at least
passivity. While our knowledge of the atti-
tudes of Nepalese Army leaders is very limited,
they appear loyal to the King but unenthusi-
astic about his assumption of direct rule. In
addition, army leaders are not anti-Con-
gress in outlook, and some of the younger offi-
cers?who have been educated at military
schools abroad?may be in sympathy with the
party. Given the prevalent political apathy
in Nepal, it is unlikely that a Congress agita-
tional campaign would evoke widespread sup-
port at this time. Nevertheless, the capabili-
ties of the opposition movement are likely
gradually to increase?especially if it receives
outside support. Faced with the prospect of
continued political deterioration the army
might throw its support to the Nepali Con-
gress, seize power itself, or force the King
to compromise with the opposition movement.
The choice would depend upon the circum-
stances at the time. In any event, the loss of
army support would result in the downfall of
the King from his present dominant position,
though he might be retained in a lesser role.
If faced with marked adversity, the King
might panic and abdicate. On balance, the
chances of King Mahendra's government re-
5
maining in power beyond another year or two
are poor.
20. Whatever the outcome of the present po-
litical struggle, no government is likely to
make more than modest progress in moderniz-
ing Nepal in view of the inherent obstacles.
The return of Koirala and the moderate so-
cialist Nepali Congress to power probably
would result in an improvement in govern-
ment operations as the Nepali Congress lead-
ers are more capable than Nepal's present
leaders. However, having failed in its initial
attempt at representative government, Nepal
will find it more difficult to make the transi-
tion from government by force and intrigue
to establishment of the rule of law. Any fu-
ture government's attempts to carry out a
program of reforms will be handicapped by the
weakness of the administrative apparatus and
the active opposition of vested interests?par-
ticularly large landlords?to any moves that
adversely affect them. While the authority of
the government is likely to be strengthened
over time and thus make possible a more rapid
pace of modernization, constant struggles for
power will result in political stability remain-
ing more of a goal than a reality. Such an en-
vironment, particularly if the struggle be-
tween the King and the Nepali Congress is an
extended one, will result in growing opportuni-
ties for the Nepalese Communists.
Economic Outlook
21. Nepal has been attempting to develop its
subsistence economy since 1950, but it has had
little success to date. Lack of communica-
tions and local capital and the difficulty of ex-
ploiting the country's resources have proved
to be formidable obstacles to development.
Even more important have been the effects
of political instability and the weaknesses of
the administration. Although the bureauc-
racy was adequate for its traditional admin-
istrative functions, it has operated poorly in
its attempts to formulate and execute eco-
nomic development programs. These develop-
ment programs have been designed to over-
come the lack of transportation and commu-
nications facilities and to raise productivity in
agriculture. However, Nepal's outmoded fiscal
system has prevented the government from
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obtaining adequate tax revenues and it pe-
riodically faces serious financial difficulties.
It has been forced to rely almost exclusively
on foreign aid for its development projects.
Nepal had received aid commitments of $144
million by the end of 1960, but only about 40
percent has been expended to date.4
22. The outlook for any significant economic
growth during the next few years is poor, and
living standards will remain among the lowest
in Asia. Indeed, the King's preoccupation
with maintaining internal security will make
it difficult for the government to maintain
even the slow pace of recent years. Under
present conditions, a large infusion of foreign
aid probably would not accelerate develop-
ment to any significant extent, particularly
since the civil service is badly overstrained at-
tempting to manage the projects already
under way. However, in view of the limited
impact of the development program to date
and the primitive nature of the economy it is
doubtful that a lack of overall economic prog-
ress will antagonize enough people in the
country to cause serious unrest in the near
future. A breakdown of the traditional econ-
omy from floods or famine would be a more
serious matter, as the government's capabili-
ties for alleviating any such distress are lim-
ited. Nevertheless, a slowdown in the devel-
opment program?brought about by a domes-
tic financial crisis or a reduction in foreign
aid?probably would eventually create unrest,
particularly among politically conscious ele-
ments.
23. No matter who governs Nepal, no more
than limited economic progress is likely until
transportation and communications facilities
4FOREIGN AID COMMITMENTS TO NEPAL
1951-1960
(millions of dollars)
India
51.7
United States
43.5
Other Free World
7.6
Total Free World
102.8
Communist China
33.7
Soviet Union
7.5
Total Communist Bloc
41.2
Total Foreign Aid
144.0
a All aid to Nepal has been on a grant basis.
6
are improved, the shortage of technicians and
administrators alleviated, and the efficiency of
the government's administrative apparatus
improved. In time, expansion of the land
under cultivation and improved agricultural
techniques may raise agricultural output
above present low levels. In addition, Nepal
has extensive timber resources and hydroelec-
tric potential?along with more modest min-
eral resources?which offer prospects for mod-
erate economic growth in the future.
International Affairs
24. Nepal's foreign relations are dominated by
the rivalry between India and Communist
China for influence in the country. Another
factor of lesser but growing importance in re-
cent years has been the competition between
the US and the USSR. Nepal regards its mem-
bership in the Afro-Asian group in the UN as
a means of preserving its independence; it has
often voted with the group against the US
position on East-West issues. Mahendra, like
virtually all Nepalese leaders, is convinced that
a neutralist foreign policy is the only one
which offers a reasonable hope of preserving
the country's independence and extracting
from the competing nations the maximum for-
eign aid consistent with this goal.
25. The King, at the same time, is more sus-
picious of India than are the Indian-oriented
Nepali Congress leaders. In addition to fear-
ing that republican sympathies emanating
from India may threaten his throne, he is
more suspicious that India aspires to a degree
of influence in Nepalese affairs which could
threaten the country's independence. This
suspicion has caused the King to adopt a
more cooperative?though still cautious?at-
titude toward Communist China.
26. The Chinese Communists are aware that
Mahendra's attitude since the coup offers
them an opportunity to expand their influence
in Nepal. Peiping has privately expressed to
the King approval of the December coup, and
has renewed its invitation to visit China later
this year?an invitation accepted by the King.
It has also adopted a conciliatory posture in
the Sino-Nepalese boundary negotiations, and
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a border treaty appears likely in the near fu-
ture. In addition, the Chinese have offered
further aid, particularly for constructing a
road between Katmandu and the Tibetan bor-
der. Although the King hopes to avoid any
substantial increase in Peiping's influence, he
appears convinced that he can use the threat
of reliance on the Chinese to keep India from
trying to unseat him. For example, he has
privately threatened to call on the Chinese if
India should intervene in Nepal. He has also
curtailed the flow of Tibetan refugees into Ne-
pal and may even have agreed to joint Sino-
Nepalese military operations inside Nepal
against Tibetan rebel bands if they attempt to
harass the Sino-Nepalese border demarcation
terms.
27. India's major interest in Nepal is to pre-
serve its integrity as a key element in the
Indian security position. Indeed, Nehru has
publicly stated that India's Himalayan de-
fense perimeter runs along Nepal's northern
border.5 The two countries have a treaty
calling for consultation if the security of
either is threatened.6 India's policy in Nepal
has long been designed to encourage the
emergence of a stable and progressive?as well
as pro-Indian?government as providing the
best insurance against Communist influence.
Thus New Delhi has provided an Indian mili-
tary training mission to increase the effective-
ness of the Nepalese Army, and has extended
sizable foreign aid to enable Nepal to embark
India also regards the isolated Himalayan fron-
tier states of Sikkim and Bhutan as falling within
its defense line, and has moved to increase its
capabilities to defend them. The number of Indian
troops in Sikkim?an Indian protectorate?has been
substantially increased, and New Delhi intends to
retain its control of the state. Bhutan, though
semi-independent and traditionally suspicious of
India, has recently been moved by fear of Chinese
expansionism to increase its ties with New Delhi.
The first road from India into Bhutan has been
completed and a small number of Indian troops per-
mitted to enter Bhutan, which will increase India's
ability to influence and defend the area.
7
on a program of economic development. At
the present time, India appears primarily
concerned with the threat to stability in Nepal,
and has continued its aid programs and as-
sured the King it will do nothing to subvert
his regime. At the same time, India is likely
to encourage Mahendra to reach a compromise
with the Nepali Congress, although in the
event of an extended struggle Indian support
is likely to be increasingly engaged on the
side of the Nepali Congress.
28. Nevertheless, we believe that India will
pursue a cautious course, lest it jeopardize
its other activities in Nepal. These include the
manning of border posts along the Nepalese-
Tibetan border and the right to recruit
Gurkha troops. There are 29 battalions of
Gurkhas totaling about 27,000 men in the
Indian Army. Such rights are dependent
upon the King's pleasure. More important,
however, is India's fear that Mahendra, if
pushed too hard, might carry out his threat
to seek Communist military support, which
would force India to intervene militarily in
Nepal. While India could secure the southern
lowlands and probably the Katmandu Valley
and other points in central Nepal, the Chi-
nese?who control two key passes north of
Katmandu?could take over much of north-
ern Nepal and thus greatly increase Indian
difficulty in securing its Himalayan frontier.
29. Nepal's relations with the West probably
will continue to be relatively good. The UK's
principal interest in Nepal in recent years has
been the recruitment of Gurkha soldiers.
Nearly 15,000 Gurkhas are now in the UK
armed forces. Despite the nationalist objec-
tions of some Nepalese to such recruiting, the
foreign exchange provided by such an ar-
rangement is important enough to make its
continuation likely. Nepal regards the US
as occasionally too willing to defer to Indian
policy toward Nepal?particularly in the co-
ordination of aid programs. Nevertheless,
Nepal regards the US primarily as a country
which can be relied on to aid its economic
development efforts without threatening its
independence.
gatolmitg?f"'
Declassified in Part - Sanitized Copy Approved for Release @ 50-Yr 2014/02/25:
CIA-RDP79R01012A018500040001-4
50X6
Declassified in Part - Sanitized Copy Approved for Release @ 50-Yr 2014/02/25:
CIA-RDP79R01012A018500040001-4
440130154-
30. Soviet activities in Nepal, which have in-
creased substantially in recent years, appear
designed chiefly to establish a USSR presence
in the country and to counter Western?and
Indian?influence. The USSR has maintained
amicable relations with the monarchy and
is moving forward to carry out its economic
aid program. Moscow has demonstrated its
willingness to act against Indian wishes by
agreeing to survey, and possibly construct,
Nepal's first east-west road. Such a road
would lessen Nepal's dependence on India as
it would no longer be necessary to use the
Indian transportation system for east-west
travel. Although Nepal probably will be re-
ceptive to future Soviet aid offers, it will con-
tinue to maintain a cautious attitude toward
the USSR.
40-063091A0M"
Declassified in Part - Sanitized Copy Approved for Release @ 50-Yr 2014/02/25:
CIA-RDP79R01012A018500040001-4
Declassified in Part - Sanitized Copy Approved for Release @ 50-Yr 2014/02/25: CIA-RDP79R01012A018500040001-4
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