Modern Nepal was created in the latter half of the 18th century when
Prithvi Narayan Shah, the ruler of the small principality of Gorkha,
formed a unified country from a number of independent hill states. The
country was frequently called the Gorkha Kingdom, the source of the term
"Gurkha" used for Nepalese soldiers.
 
After 1800, the heirs of Prithvi Narayan Shah proved unable to
maintain firm political control over Nepal. A period of internal
turmoil followed, heightened by Nepal's defeat in a war with the British
from 1814 to 1816. Stability was restored after 1846 when the Rana
family gained power, entrenched itself through hereditary prime
ministers, and reduced the monarch to a figurehead. The Rana regime, a
tightly centralized autocracy, pursued a policy of isolating Nepal from
external influences. This policy helped Nepal maintain its national
independence during the colonial era, but it also impeded the country's
economic development.

In 1950, King Tribhuvan, a direct descendant of Prithvi Narayan Shah,
fled his "palace prison" to newly independent India, touching off an
armed revolt against the Rana administration. This allowed the return
of the Shah family to power and, eventually, the appointment of a non-
Rana as prime minister. A period of quasi-constitutional rule followed,
during which the monarch, assisted by the leaders of fledgling political
parties, governed the country. During the 1950s, efforts were made to
frame a constitution for Nepal that would establish a representative
form of government, based on a British model.

Democracy Develops

In early 1959, King Mahendra issued a new constitution and the first
democratic elections for a national assembly were held. The Nepali
Congress Party, a moderate socialist group, gained a substantial victory
in the election. Its leader, B.P. Koirala, formed a government and
served as prime minister.

Declaring parliamentary democracy a failure 18 months later, King
Mahendra dismissed the Koirala government and promulgated a new
constitution on December 16, 1962. The new constitution established a
"partyless" system of panchayats (councils) which King Mahendra
considered to be a democratic form of government closer to Nepalese
traditions. As a pyramidal structure progressing from village
assemblies to a Rastriya Panchayat (National Parliament), the panchayat
system enshrined the absolute power of the monarchy and kept the King as
head of state with sole authority over all governmental institutions,
including the Cabinet (Council of Ministers) and the parliament.

King Mahendra was succeeded by his 27 year-old son, King Birendra,
in 1972. Amid student demonstrations and anti-regime activities in
1979, King Birendra called for a national referendum to decide on the
nature of Nepal's government--either the continuation of the panchayat
system with democratic reforms or the establishment of a multiparty
system. The referendum was held in May 1980, and the panchayat system
won a narrow victory. The king carried out the promised reforms,
including selection of the prime minister by the Rastriya Panchayat.

Movement To Restore Democracy

In 1990, the political parties again pressed the king and the government
for change. Leftist parties united under a common banner of the United
Left Front and joined forces with the Nepali Congress Party to launch
strikes and demonstrations in the major cities of Nepal. This "Movement
to Restore Democracy" was initially dealt with severely, with more than
50 persons killed by police gunfire and hundreds arrested. In April,
the king capitulated. Consequently, he dissolved the panchayat system,
lifted the ban on political parties, and released all political
prisoners.

An interim government was sworn in on April 19, 1990, headed by
Krishna Prasad Bhattarai as prime minister presiding over a cabinet made
up of members of the Nepali Congress Party, the communist parties of
Nepal, royal appointees and independents.

The new government drafted and promulgated a new constitution in
November 1990, which enshrined fundamental human rights and
established Nepal as a parliamentary democracy under a constitutional
monarch. International observers characterized the May 1991 elections
as
free and fair in which the Nepali Congress won 110 seats out of 205 to
form the government. The largest opposition, the United Marxist and
Leninist Party (UML), won 69 seats. Girija Prasad Koirala became prime
minister and formed the government. In May/June of 1992 the structure
of Nepal's new democratic government was completed following local
elections in which the Nepali Congress Party scored a convincing
victory.

source: U.S. State Department Background Notes 1995