Nepal has shown interest in developing a mutually advantageous relationship with Bhutan, but substantial problems have persisted. Through its own treaty with India, signed in 1949, Bhutan had generally followed New Delhi's guidance in foreign policy matters. Bhutan had serious reservations over joining in regional and international organizational politics bearing Nepal's initiatives and had ignored the concept of a Himalayan federation. Another potential source of dissension in Nepalese-Bhutanese relations was the presence of a large Nepalese community in southern Bhutan. In the early 1990s, the large Nepalese population emerged as a potentially divisive issue between the two countries. In spite of these difficulties, Kathmandu maintained nonresident diplomatic relations with Thimpu.

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Source: U.S. Library of Congress