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September 2005

Background Note: Bhutan

Flag of Bhutan is divided diagonally from lower hoist side corner into yellow
upper triangle, orange lower triangle; centered along dividing line is black
and white dragon facing away from hoist side.

PROFILE

OFFICIAL NAME:
Kingdom of Bhutan

Geography
Area: 46,500 sq. km.
Cities: Capital--Thimphu (pop. approx. 55,000) Other significant
cities--Paro, Phoentsholing, Punakha, Bumthong.
Terrain: Mountainous, from the Himalayas to lower-lying foothills and some
savannah.
Climate: Alpine to temperate to subtropical with monsoon season from June to
September.

People
Nationality: Noun and adjective--Bhutanese.
Population. 2,185,569; note: other estimates range as low as 810,000 (July
2004 est.).
Annual growth rate: 2.12% (2004 est.). Density--14 per sq. km.
Ethnic groups: Drukpa 50% (which is also inclusive of Sharchops), as well as
ethnic Nepalese (Lhotsampas) 35%, and indigenous or migrant tribes 15%.
Religions: Lamaistic Buddhist 75% (state religion), Indian- and
Nepalese-influenced Hinduism 25%.
Languages: Dzongka (official language), English (medium of instruction),
Sharchop, Nepali.
Education: Years compulsory--11. Literacy--54% (est.). Primary school gross
enrollment rate (2004)--81%. Women's literacy (2004)--34%.
Health: Infant mortality rate--total: 102.56 deaths/1,000 live births;
female: 104.89 deaths/1,000 live births (2004 est.); male: 100.35 deaths/
1,000 live births). Life expectancy--total population 53.99 years; male 66.1
years; female 65.9 years (2004 est.).
Work force (1994): Agriculture--57.2%; government--2%; business--1.4%;
others--1.4%. There is a high unemployment rate.

Government
Type: Evolving from a monarchy to a constitutional monarchy. Previously,
various laws and Buddhist values guided the relationship between the state
and the people, but currently a 39-member Drafting Committee composed of
representatives of the people, judiciary, the Monastic Order, and the Royal
Government are writing a Constitution which is expected to be presented to
the National Assembly for ratification in 2005.
National Day: December 17 (1907)
Branches: Executive--king or Druk Gyalpo (chief of state), prime minister
(head of government), Council of Ministers, Royal Advisory Council (together
they make the Cabinet or Lhengye Zhungtsho).
Advisory--Monastic Order (or Monk Body-Dratshang). Legislative--National
Assembly (Tshogdu). Judicial--High Court (Thrimkhang Gogma), District Courts,
and local area arbitration.
Administrative subdivisions: 20.
Political parties: None.
Suffrage: Registered resident with legitimate citizenship, age 21 and above.

Economy
GDP (2001): U.S. $482 million.
Real growth rate (2004): 6.5%.
Per capita GDP (2004): U.S. $929.60.
Natural resources: Hydroelectric power, construction, timber, gypsum, calcium
carbide.
Agriculture and forestry (all figs., 2001): 33.8% of GDP.
Construction: 11.8% of GDP.
Finance: 10.3% of GDP.
Transport and communication: 10% of GDP.
Electricity: 9.9% of GDP.
Government service: 9.9% of GDP.
Manufacturing: 9.8% of GDP.
Trade: Exports (2001-02)--U.S. $ 97.7 million: hydroelectricity, vegetables
and fruits, processed foods, minerals, wood products, textiles, machinery.
Imports (2001-02)--U.S.$188.4 million: machinery, mechanical appliances and
electronics, plastics and rubber products, textiles, whiskies and prepared
foodstuffs, medicines and pharmaceuticals, vegetable oils and foodstuffs.
Major trade partners--India, Bangladesh, Japan, Singapore, Denmark.

PEOPLE
The people of Bhutan can be divided into three broad ethnic
categories--Ngalops, Sharchops, and Lhotsampas. The Ngalops make up the
majority of the population, living mostly in the western and central areas.
The Ngalops are thought to be of Tibetan origin, arriving in Bhutan during
the 8th and 9th centuries A.D. and bringing Buddhism with them. Most Ngalops
follow the Drukpa Kagyupa discipline of Mahayana Buddhism. In a country that
is deeply rooted within the Buddhist religion, many people's sect of
religion, as opposed to their ethnic group, characterizes them. The Ngalops
predominate in the government, and the civil service and their cultural norms
have been declared by the monarchy to be the standard for all citizens.

The Sharchops, who live in the eastern section of Bhutan, are considered to
be descendants of the earliest major group to inhabit Bhutan. Most follow the
Ningmapa discipline of Mahayana Buddhism. Sharchop is translated as "people
of the east." The Ngalops, Sharchops, and the indigenous tribal people are
collectively known as Drukpas and account for about 65% of the population.
The national language is Dzongka, but English is the language of instruction
in schools and an official working language for the government.

The Lhotsampas are people of Nepali descent, currently making up 35% of the
population. They came to Bhutan in the 19th and 20th centuries, mostly
settling in the southern foothills to work as farmers. They speak a variety
of Nepali dialects and are predominantly Hindu.

HISTORY
Bhutan's early history is steeped in mythology and remains obscure. It may
have been inhabited as early as 2000 B.C., but not much was known until the
introduction of Tibetan Buddhism in the 9th century A.D. when turmoil in
Tibet forced many monks to flee to Bhutan. In the 12th century A.D., the
Drukpa Kagyupa school was established and remains the dominant form of
Buddhism in Bhutan today. The country's political history is intimately tied
to its religious history and the relations among the various monastic schools
and monasteries.

The consolidation of Bhutan occurred in 1616 when Ngawana Namgyal, a lama
from Tibet, defeated three Tibetan invasions, subjugated rival religious
schools, codified an intricate and comprehensive system of law, and
established himself as ruler (shabdrung) over a system of ecclesiastical and
civil administrators. After his death, infighting and civil war eroded the
power of the shabdrung for the next 200 years when in 1885, Ugyen Wangchuck
was able to consolidate power and cultivated closer ties with the British in
India.

In 1907, Ugyen Wangchuck was elected as the hereditary ruler of Bhutan,
crowned on December 17, 1907, and installed as the head of state Druk Gyalpo
(Dragon King). In 1910, King Ugyen and the British signed the Treaty of
Punakha which provided that British India would not interfere in the internal
affairs of Bhutan if the country accepted external advice in its external
relations. When Ugyen Wangchuck died in 1926, his son Jigme Wangchuck became
the next ruler, and when India gained independence in 1947, the new Indian
Government recognized Bhutan as an independent country. In 1949, India and
Bhutan signed the Treaty of Peace and Friendship, which provided that India
would not interfere in Bhutan's internal affairs but would be guided by India
in its foreign policy. Succeeded in 1952 by his son Jigme Dorji Wangchuck,
Bhutan began to slowly emerge from its isolation and began a program of
planned development. Bhutan became a member of the United Nations in 1971,
and during his tenure the National Assembly was established and a new code of
law, as well as the Royal Bhutanese Army and the High Court.

In 1972, the present king, Jigme Singye Wanchuck, ascended the throne at age
16. He has emphasized modern education, decentralization of governance, the
development of hydroelectricity and tourism and improvements in rural
developments. The current king has established an overarching development
philosophy of "Gross National Happiness." It recognizes that there are many
dimensions to development and that economic goals alone are not sufficient.

GOVERNMENT AND POLITICAL CONDITIONS
Traditionally a decentralized theocracy and, since 1907, a monarchy, Bhutan
is evolving into a constitutional monarchy with a representative government.
In 2002, the election laws were changed so that each citizen over the age of
21 could vote by secret ballot for a representative to the National Assembly
(Tshongdu); previously, only one vote per family was allowed. The Tshongdu is
composed of about 150 members, including some appointed from the Monk Body as
well as some senior government representatives. They in turn elect the
Council of Ministers. Prior to 2003, the Council had six members and rotated
the responsibility as prime minister and head of government between each one
for a period of one year, but in 2003, the National Assembly elected four
additional ministers and also selected the prime minister.

The spiritual head of Bhutan, the Je Khempo--the only person besides the king
who wears the saffron scarf, an honor denoting his authority over all
religious institutions--is nominated by monastic leaders and appointed by the
king. The Monk Body is involved in advising the government on many levels.

Bhutan is divided into 20 districts or dzongkhags, each headed by a district
officer (dzongda) who must be elected. In addition, each district also is
broken into smaller areas known as geog (village), led by a locally elected
leader called a gup. There are 201 elected gups. In 2002, the National
Assembly created a new structure for local governance at the geog level. Each
local area is responsible for creating and implementing its own development
plan, in coordination with the district.

Principal Government Officials
Head of State--King Jigme Singye Wangchuck
Prime Minister (Head of Government) and Minister for Agriculture--Lyonpo
Sangay Ngedup
Minister for Trade and Industry--Lyonpo Yeshey Zimba
Minister for Home and Cultural Affairs--Lyonpo Jigmi Y. Thinley
Minister of Foreign Affairs--Lyonpo Khandu Wangchuck
Minister for Finance--Lyonpo Wangdi Norbu
Minister for Education--Lyonpo Thinley Gyamtsho
Minister for Health--Lyonpo (Dr.) Jigme Singay
Minister for Labor and Human Resources--Lyonpo Ugyen Tshering
Minister for Works and Human Settlements--Lyonpo (Dr.) Kizang Dorji
Minister for Information and Communications--Lyonpo Leki Dorji
Ambassador to the United Nations Headquarters--Lyonpo Daw Penjo

The United States and the Kingdom of Bhutan have not established formal
diplomatic relations; however, the two governments have informal and cordial
relations.

Bhutan maintains a Permanent Mission to the United Nations in New York. The
address is 763 First Avenue, New York, NY 10017; tel: 212-682-2268, fax:
212-661-0551.

ECONOMY
The economy, one of the world's smallest and least developed, is based on
agriculture, forestry, and hydroelectricity. Rugged terrain makes it
difficult to develop roads and other infrastructure. Despite this constraint,
hydroelectricity and construction continue to be the two major industries of
growth for the country. As these two areas are increasing productivity, there
continues to be a positive outlook for development throughout Bhutan. The
economic program in the current 5-year-plan (2002-07) places a strong
emphasis on improving education and infrastructure with a special emphasis on
increasing activities in the sectors of information and communication
technology, energy, and tourism. After the global slowdown within the travel
industry, Bhutan's tourist industry is beginning to show signs of recovery.

Bhutan's economy has been on an upturn due to recent subregional economic
cooperation efforts. Already this plan has strengthened the current trade
relations with India, as well as opened an avenue of trade with Bangladesh.
In May 2003, the Bilateral Free Trade Agreement between Bangladesh and Bhutan
was re-signed. Bangladesh is Bhutan's second largest trade partner, after
India. In January 2004, as a member of the South Asian Association for
Regional Cooperation (SAARC), Bhutan also joined the South Asian Free Trade
Agreement (SAFTA). In February 2004 Bhutan joined the Bangladesh, Indian,
Myanmar, Singapore, and Thailand Economic Cooperation Forum (BIMSTEC). Bhutan
has applied for membership in the World Trade Organization and is in the
process of developing clear legal and regulatory systems designed to promote
business development

FOREIGN RELATIONS

India
Relations between India and Bhutan are governed by the 1949 Treaty of Peace
and Friendship. The treaty ensures India's neutrality in Bhutan's internal
affairs, in exchange for Bhutan's agreement to be guided by India in foreign
policy matters. But in practice, Bhutan exercises sovereignty on many issues.
India is Bhutan's largest donor and supplies approximately 80% of Bhutan's
foreign assistance. In recent years, insurgents on the Indian side of the
border from the United Liberation Front of Assam (ULFA) and the Bodos have
used Bhutan as a safe haven. In December 2003, Bhutan military troops
expelled Indian insurgents from Assam. Through this joint effort with India,
Bhutan strengthened border security and continued cooperation with the Indian
military.

China
Bhutan and China do not have diplomatic relations, although border talks
between the two nations have occurred.

Nepal
These two countries established diplomatic relations in 1983. Nepal and
Bhutan are currently negotiating to resolve a 13-year-old refugee situation,
in which 100,000 refugees are residing in seven UNHCR camps in Nepal. Most of
the refugees claim they are Bhutanese citizens, while Bhutan alleges that
most are non-nationals or "voluntary emigrants," who forfeited their
citizenship rights. In 2003, a joint Bhutan-Nepal verification team
categorized refugees from one camp into four groups, but progress remains
stalled.

United Nations
Bhutan became a member of the United Nations in 1971. Bhutan does not have
diplomatic relations with any of the permanent members of the UN Security
Council. Bhutan was elected to the UN Commission on Human Rights in 2003 and
will serve until 2006.

Other Countries
Bhutan enjoys diplomatic relations with seven European nations, which form
The "Friends of Bhutan" group, together with Japan. These countries are
Switzerland, Denmark, Sweden, Norway, the Netherlands, Finland, and Austria.
Also known as donor nations, they contribute generously to Bhutanese
development and social programs. Bhutan also has diplomatic relations with
South Korea, Canada, Australia, Kuwait, Thailand, Bahrain, Bangladesh, the
Maldives, Sri Lanka, and Pakistan.

DEFENSE
Bhutan has 8,000 members in five military branches: the Royal Bhutan Army,
Royal Bodyguard, National Militia, Royal Bhutan Police, and Forest Guards. In
FY 2002, the Bhutanese Government spent 1.9% of its GDP on the military or
$U.S.9.3 million. India maintains a permanent military training presence in
Bhutan through IMTRAT, the Indian Military Training Team.

U.S.-BHUTAN RELATIONS
The U.S. Embassy in New Delhi, India, has consular responsibilities for
Bhutan, but U.S. citizens also may request assistance from U.S. Embassies in
Kathmandu, Nepal, or Dhaka, Bangladesh. The United States and Bhutan do not
have diplomatic relations, and the United States does not give foreign
assistance to Bhutan. Informal contact is maintained through the U.S. Embassy
and the Bhutanese Embassy in New Delhi. Bhutan does participate in a regional
program for South Asia sponsored by the U.S. Agency for International
Development (USAID) that helps countries develop their power infrastructure
(SARI-E). A few Bhutanese military officers have attended courses at the
Asia-Pacific Center for Security Studies. The U.S. Government annually brings
several Bhutanese participants to United States through its International
Visitors Program.

Principal U.S. Officials (U.S. Embassy, India)
Ambassador--David C. Mulford
Deputy Chief of Mission--Robert O. Blake
Public Affairs--Michael H. Anderson
Political Affairs Geoffrey R. Pyatt
Economic Affairs--Lee H. Brudvig
Scientific Affairs--Dr. Marco DiCapua
Commercial Affairs--John Peters
Agricultural Affairs--Chad Russell
Management Affairs--James Forbes
Consular Affairs--William Bartlett
USAID Mission, Director--Walter E. North

The U.S. Embassy in India is located on Shantipath, Chanakyapuri, New Delhi
110021 (tel. 91-11-2419-8000) (fax: 91-11-24190017). Embassy and consulate
working hours are Monday to Friday, 8:30 a.m. to 5:30 p.m. Visa application
hours are Monday to Friday, 8:30 a.m. to 10:00 a.m. Please consult the
Consular Affairs Web site. Further information about Bhutan also can be
obtained at the official Web site of Bhutan's Tourism Corporation.