International Relations and Foreign Affairs

News Brief

On 6 June 2025, the U.S. Department of Homeland Security announced the termination of Nepal’s Temporary Protected Status (TPS), effective 60 days after publication of the notice. Similarly, the future of MCC-funded projects in Nepal is uncertain as its global budget faces a drastic cut from $930 million to $224 million for 2026, risking delays in key infrastructure initiatives despite no formal termination notice.

June 6, 2025: Two German security printing companies, Veridos GmbH and Muehlbauer ID Service GmbH, have won Nepal’s new e-passport contract to deliver 6.4 million passports over five years, ending the French firm IDEMIA’s dominance after 15 years. The French firm IDEMIA claimed the bidding favored the German rivals unfairly and has filed a formal complaint citing technical and financial discrepancies in the review process.

Nepal began exporting 40 MW of electricity to Bangladesh via India’s power grid, marking South Asia’s first trilateral power deal. On a similar note, Nepal will begin exporting 5,000 tonnes of buffalo meat daily to China starting June 2026, backed by Rs 27 billion in Chinese investment.

India evacuated nine Nepali nationals from Iran amid escalating regional tensions. The evacuations were coordinated after Nepal’s Foreign Minister Arzu Rana Deuba requested assistance, showcasing India’s regional support in crisis diplomacy.

A total of 58 Nepali youths, trafficked to India under false employment promises and held captive in Rudrapur and Kashipur, were rescued in a joint operation by Nepali and Indian police, civil society, and the Nepali Embassy. Victims from 15 districts were repatriated via Gaddachauki. 

Foreign Minister Arzu Rana Deuba addressed the FAO Ministerial Special Event in Rome, calling for global action to build equitable, climate-resilient food systems. She urged international financing and partnerships to support LDCs like Nepal, and shared Nepal’s efforts in scaling nutrition programs. A six-member delegation is attending the FAO Conference through July 4.

During the 13th Nepal-Tibet trade facilitation meeting in Lhasa, Nepal urged China to upgrade infrastructure at four border points: Tatopani, Korala, Olangchung Gola, and Kimathanka. Both sides discussed digital ID cards for border residents, banking access, and renaming trade expos. China pledged support, while Nepal reaffirmed its One-China policy. 

A Chinese preliminary report confirmed 112 billion cubic meters of methane gas in Dailekh, potentially supplying Nepal for 50 years. Drilling reached 4,000 meters deep, with samples sent to China for detailed analysis.

News Analysis

PM Oli’s Diplomatic Outreach amid Mounting Pressure

Despite several significant developments in Nepal’s international engagement, Prime Minister Oli’s diplomatic outreach stood out as the most prominent in June, especially against the backdrop of mounting political challenges at home. In late June, he traveled to Seville, Spain, to attend the Fourth International Conference on Financing for Development, a once-in-a-decade event held this year from June 30 to July 3. At the conference, Oli called for coordinated global efforts to bridge financing gaps for developing nations, endorsed the establishment of a new independent commission to shape the future of development aid (backed by the Gates Foundation), and emphasized sustainability, disaster risk reduction, and climate goals in line with the Paris Agreement.

During the trip, Oli held bilateral meetings with several global leaders, including his Spanish, Portuguese, and Egyptian counterparts, as well as the UN Secretary-General António Guterres. Although the effective adoption of the “Compromiso de Sevilla,” which envisions an annual $4 trillion boost in financing for developing countries through increased official development assistance and more equitable global governance, remains uncertain due to the U.S. withdrawal, Oli’s engagements may help unlock much-needed development assistance for Nepal, which has declined following the Trump administration’s policy shifts.

Just days before departing for Europe, PM Oli celebrated the announcement by a Chinese technical team confirming a vast reserve of methane gas in Nepal; he touted it as a personal victory and made ambitious promises to generate and supply methane gas to the Nepali public within a year. Given China’s involvement in the exploration phase, its role is likely to deepen in the upcoming stages of drilling, extraction, and processing, marking a new frontier in Sino-Nepal cooperation in energy generation.

As Oli’s tenure marks a year, his track record on actual delivery remains thin. While this has invited criticism on the governance front, a more pressing challenge comes from former President Bidhya Devi Bhandari’s entry into active politics. Backed by key CPN-UML stalwarts, Bhandari appears to pose a direct challenge to Oli’s leadership, particularly as dissatisfaction grows within the party over his increasingly unilateral decision-making and consolidation of power. Notably, China’s decision to invite Bhandari to a sub-regional gathering of communist leaders—and the high regard accorded to her there—suggests tacit Chinese endorsement of her political comeback.

Faced with mounting pressure on both domestic and international fronts, therefore, PM Oli appears keen to reset ties with India. Nepali media reports suggest that his visit to India is likely to take place in late July, following his return from Spain. However, a formal invitation from New Delhi remains pending, reportedly due to India’s desire for concrete progress on key bilateral projects rather than another symbolic goodwill visit. Signaling a renewed willingness to move forward, Oli publicly reaffirmed the validity of the Mahakali Treaty at an event in Kathmandu on June 29, where he defended it against long-standing criticisms of compromising Nepal’s sovereignty and selling out national assets. In this shifting landscape, internal power struggles within the CPN-UML is likely to create new openings for regional actors to engage in geopolitical maneuvering in Nepal. 
 

Domestic Politics and Federalism

News Brief

​Former President Bidya Devi Bhandari has formally re-entered active politics by renewing her membership with the CPN‑UML. She announced her intention at a Madan Bhandari Foundation event in Kathmandu on June 28, 2025. Having stepped away from the party after being elected head of state in October 2015, she returns with the aim of sustaining the UML’s political trajectory. Her announcement concludes months of speculation fueled by a nationwide tour and a 10‑day delegation visit to China from May 24. Bhandari is widely expected to contest for the party’s top post at the upcoming general convention, setting the stage for a possible leadership contest with Prime Minister KP Sharma Oli.

Former Prime Minister Madhav Kumar Nepal has been granted bail of NPR 3.5 million by the Special Court in Kathmandu. The decision came after a nearly three‑hour detention hearing on June 25, 2025, in connection with the high-profile Patanjali land scam. The Commission for the Investigation of Abuse of Authority (CIAA) has accused him of facilitating the illegal sale of government‑exempt land to Patanjali Yogpeeth and its affiliate during his tenure from May 25, 2009, to February 6, 2011, and is seeking a prison sentence of 10–14 years and damages totaling around NPR 185 million. 

Unexplained last‑minute amendments to the Federal Civil Service Bill have sparked concerns. The bill passed by the House of Representatives diluted the “cooling‑off” clause, which initially mandated a two‑year wait before retired bureaucrats could take up constitutional or diplomatic positions. The new Section 82(5) carves out an exemption, allowing such appointments within two years, contradicting the original intent expressed in Section 82(4). 

Chief Minister Satish Kumar Singh of Madhesh Province is under fire after a chaotic budget presentation marked by delays, disorganization, and walkouts by several ministers. The NRs 39.50 billion budget for FY 2025/26 lacked clear priorities, drawing criticism amid revelations that only 0.39 percent of the capital budget had been spent in the first five months. The Janamat Party, which leads the ruling coalition, has internally criticized the government’s inefficiency, citing poor coordination and stalled development. Amid growing discontent, Singh has promised an investigation into the budget process, but skepticism remains high across both coalition and opposition ranks.

News Analysis

Bidya Devi Bhandari’s Political Comeback and What It Reveals About UML and Nepal’s Party Politics

Former President Bidya Devi Bhandari’s formal return to active politics through the CPN-UML may appear as a revival of legacy politics, but it also exposes deeper tensions within the party and Nepal’s broader political culture. CPN-UML today is tightly controlled by Prime Minister KP Sharma Oli. His centralized leadership style has alienated many party leaders and cadres. In this context, Bhandari is increasingly seen by some as a credible internal challenger from within the party. The party faithfuls hope that she can recalibrate the party’s ideological and organizational trajectory.

However, her re-entry also raises uncomfortable questions about Nepal’s institutional integrity. The fact that a former ceremonial head of state, who had to relinquish party membership to uphold constitutional neutrality, can seamlessly rejoin party politics blurs the line between state and party. This reflects a troubling conflict of interest. The former President’s tenure was criticized significantly for her “partition” decisions favoring the party. Her reinstatement adds to the concerns raised.  Moreover, this move also reinforces public frustration toward a political system that appears transactional, personality-driven, and dismissive of ethical boundaries.

Bhandari has positioned herself as a custodian of “People’s Multi-Party Democracy.” This political doctrine, advanced by her late husband, Madan Bhandari, led to the integration of the CPN (UML) into competitive parliamentary politics. Yet, her return does little to further the core spirit of that doctrine, which emphasized democratic pluralism and grassroots empowerment. Intra-party democracy cannot be injected top-down by legacy figures; it must evolve organically through reform, internal checks, and generational leadership change. Her candidacy, while potentially disruptive to Oli’s monopoly, risks replicating the same elite-centric power politics it claims to challenge.

Bhandari’s comeback is less about ideological renewal and more about factional alignment within a stagnant party system. It symbolizes the broader erosion of political norms, where former heads of state rejoin partisan competition and the promise of democratic culture remains trapped within the walls of powerful personalities.

Political Economy and Development

News Brief

Finance Minister Bishnu Prasad Paudel presented Nepal’s federal budget of Rs.1.964  as per  which the IT, hotel, and resort sectors now get a 20% corporate tax cut, it also proposes a full income tax exemption for startups with turnover up to NPR 10 crores. Nepali companies are allowed to set up overseas sales branches and processing units permitting 25% of export income to be reinvested abroad while requiring 50% of profits to be repatriated to Nepal and granting legal recognition to Nepali citizens receiving sweat equity from foreign firms.

The intensifying conflict between Israel and Iran had led to the largest one-day spike in oil prices in the past three years, raising concerns about how much further oil markets could rise. Although no direct correlation has been derived, Nepal Oil Corporation (NOC) also raised the prices of petrol, diesel, and aviation fuel. 

The Supreme Court of Nepal has ordered the removal of all taxes on sanitary pads, declaring them essential health items rather than luxury goods.  Currently, imported sanitary pads face up to 18% in taxes while raw materials for local production carry duties up to 12%. The president of the Nepal Sanitary Pad and Diaper Manufacturers Association welcomed the ruling but awaits full clarity on its implementation. 

The Asian Development Bank has unveiled a new $2.3 billion Country Partnership Strategy for Nepal (2025–2029), focusing on green, inclusive, and job-rich growth through private sector-led transformation, improved public services, and climate resilience. Greenwashing has been a great issue of Nepal and needs better redressal mechanisms. 

Nepal’s draft Civil Aviation Policy proposes allowing up to 90% FDI in international airlines and up to 95% in aircraft manufacturing, while keeping the 49% limit for domestic carriers aiming to modernize the 2006 policy. This marks a long overdue modification to existing airlines related policies in Nepal.

Prime Minister KP Sharma Oli, addressing a discussion among Nepali and Spanish businesspersons, urged Spanish investors during The Fourth United Nations Conference on Financing Development to explore opportunities in Nepal, highlighting the government's commitment to fostering investment as part of its national ambition of a "Prosperous Nepal, Happy Nepali." The economy back home says otherwise.

News Analysis

Nepal in a World of Shrinking Foreign Investment

UN Trade and Development (UNCTAD) Secretary-General Rebeca Grynspan launched the World Investment Report 2025  in Geneva, delivering a powerful call to action as she unveiled new data showing a continued decline in global foreign direct investment (FDI)  with dire consequences for developing countries. The World Bank said in a report that foreign direct investment (FDI) into developing economies has hit the lowest level since 2005, citing growing trade and investment barriers. Foreign investment in developing countries in renewable energy fell by 31% while the digital economy rose substantially to 140% and 107%, respectively.

According to the report, Nepal’s FDI inflow fell to $57 million in 2024, a 69% drop from $185 million in 2019, mirroring a broader South Asian decline. The World Investment Report 2025 cites weak follow-through and policy barriers as key issues. Earlier towards the end of last month Finance Minister Bishnu Prasad Paudel presented the FY 2025/26 federal budget  where the government has made attempts to facilitate foreign investments by introducing tax cuts such as a 20% corporate tax break for IT, hotel, and resort sectors. It also permits Nepali companies to establish overseas sales branches and processing units for semi-processed goods, with conditions on reinvestment and profit repatriation. Nepal Government has time and again made failed attempts to facilitate FDI without addressing the grassroots problems, be it through fiscal budgets or by passing hurried ordinances without proper consultations. The earlier ordinances passed by the government were also criticized for its legal loopholes that remained unanswered. 

However, these are just mere financial changes, foreign investment in Nepal must be viewed through a more critical lens, especially as concentrated capital continues to flow into Kathmandu and a few economic hubs, leaving rural and marginalized regions behind. Despite Nepal’s ambitions to attract digital FDI, the country lacks the foundational infrastructure such as reliable internet, data centers, and skilled human capital to truly support a thriving digital economy. Nepal should also look into addressing the needs of NRNs who could be an invaluable asset to foster economic development in the country. It is pertinent for the country to prioritize long-term planning and systemic reforms to ensure foreign investment actually contributes to inclusive, sustainable development rather than reinforcing existing inequalities and inefficiencies. The slow global investment climate is a direct result of public policy and developing countries like Nepal should look at investments from a fresh, inward lens to facilitate the same.

Environment and Climate Change

News Brief

June 2025 brought mounting evidence of Nepal’s growing climate vulnerability, paralleled by a global push to address environmental crises. Globally, World Environment Day 2025 was observed on June 5 under the theme #BeatPlasticPollution, led by the UN Environment Programme and hosted in South Korea. 

The Himalayan village of Samjung in Upper Mustang was permanently relocated after its water source vanished due to glacial retreat and a decline in snowfall, becoming a stark case of climate-induced displacement. 

A study revealed that green spaces such as forests, parks, and ponds could lower city temperatures by up to 1.6°C, presenting an urgent case for urban reforestation amid increasing urban heat. The Department of Hydrology and Meteorology projected above-average monsoon rainfall, which has escalated concerns over floods and landslides, particularly in climate-sensitive districts. 

Alarming ecological shifts were also reported, with ten king cobras discovered near Kathmandu Valley, likely due to habitat disruption and warming temperatures.

Further south, the Chure and Siwalik ranges continued to suffer from rampant deforestation and desertification, threatening water recharge zones and exposing thousands to long-term ecological risk.

News Analysis

Samjung Relocation: Nepal’s Climate Alarm

In June 2025, the climate crisis hit home as Samjung, an ancient Himalayan village in Upper Mustang, became one of the first Nepali settlements to relocate due to long-term environmental change. Once sustained by seasonal snowfall and glacial meltwater, Samjung’s water source dried up completely, forcing its population to shift 15 kilometers downhill toward the Kali Gandaki River. This isn’t a temporary migration caused by a sudden disaster – it’s a permanent displacement rooted in slow-onset climate change.

Samjung’s story is a wake-up call. It signals that glacial retreat, shifting snowfall patterns, and vanishing springs are no longer distant risks, but present realities for mountain communities. Nepal’s high-altitude settlements, already vulnerable due to remoteness, poverty, and fragile infrastructure – face the looming threat of becoming uninhabitable if action is not taken.

This incident underscores the urgent need for Nepal to develop climate relocation policies, invest in climate-resilient infrastructure, and establish early warning and water-monitoring systems in glacial regions. Moreover, it calls for a rethink of current development strategies in the Himalayas, prioritizing sustainability over expansion. If unattended, Samjung won’t be an exception, but the first of many communities pushed to the margins by a warming world.

Gender, Social Inclusion & Human Rights

News Brief

The two-layered approach of combining insurance payouts with direct cash assistance is helping reduce the income loss burden faced by marginalized women workers during climate-related events. 

On June 10, the United Nations hosted a conference titled Artificial Intelligence for Inclusion: Strengthening Workforce Participation for Persons with Disabilities, organized by the Permanent Mission of Canada. Promising efforts were shared, such as Germany’s distribution of tablets to workers with intellectual disabilities and growing global awareness of inclusive design needs. 

In a landmark move, Nepal’s House of Representatives passed the Nepal Citizenship Bill (Second Amendment) Bill, 2082 BS, allowing children to acquire citizenship through their mothers, even if the father's identity is unknown. 

Tata Steel is celebrating a decade of its diversity and inclusion initiative, MOSAIC, launched in 2015, to have 20 pc diversity workforce by 2028. Marking its 10th anniversary during Pride Month 2025, the company reaffirmed its commitment to achieving 20% workforce diversity across the group by 2028. 

Tens of thousands in Hungary defy ban to march at Budapest Pride for LGBTQ rights in defiance of a government ban and police warnings, marking the 30th annual Budapest Pride. Organisers estimated up to 200,000 attendees, making it Hungary’s largest-ever Pride and possibly its biggest protest.  

News Analysis

Citizenship Amendment Bill a Step Forward by the House of Representatives

The passage of the Nepal Citizenship (Second Amendment) Bill, 2082 BS, marks a pivotal moment in correcting long-standing contradictions within Nepal’s citizenship framework, especially those that discriminated against women. For years, Nepal’s laws contained conflicting provisions that claimed to offer equal rights on paper but imposed unequal conditions in practice.

Under the Nepal Citizenship Act, 2063, Clause 3 stated that citizenship by descent could be acquired through either parent. Yet, Clause 5(ii) contradicted this by allowing only naturalized citizenship to children of Nepali mothers married to foreign men, and only if the child could prove they hadn’t acquired the father's foreign citizenship. Meanwhile, children of Nepali fathers married to foreign women faced no such restrictions and were automatically granted citizenship by descent. The Constitution of Nepal (2015) mirrored this inconsistency. Article 11(2b) stated that a child could obtain citizenship through either parent, but Articles 11(3), 11(5), and 11(7) created barriers, limiting descent-based citizenship when the mother was married to a foreigner, and allowing it only if the father was "unknown." These contradictory provisions not only violated Article 18 of Nepal’s Constitution (equality before the law) but also breached Nepal’s obligations under international treaties like CEDAW and the CRC, which call for equal nationality rights for men and women and protection of children from statelessness.

The new amendment addresses this contradiction by allowing children born to Nepali mothers residing in Nepal, with no foreign passport or citizenship, and whose father's identity is unknown, to obtain naturalized citizenship through self-declaration. While it still does not grant citizenship by descent, the reform simplifies access to legal identity and removes the burden of proving the father's nationality or status, an issue that had previously blocked access to education, employment, and fundamental rights.