Number: RL31599 Title: Nepal: Background and U.S. Relations Authors: Bruce Vaughn, Foreign Affairs, Defense, and Trade Division Abstract: American foreign policy interests in Nepal have sought to strengthen democracy and to prevent the collapse of Nepal which, should it become a failed state, could provide a base of support for terrorists or insurgents in the region. Such a scenario could be destabilizing to the security dynamics of the region. The United States also seeks to promote democracy and civil society in Nepal and provide developmental assistance to its people. Political instability and insurgency-related violence has undermined the country's economy. U.S. government officials have asserted that further deterioration of Nepal's circumstances could destabilize the region, spur new tensions between India and China, and potentially create a new terrorist haven in South Asia. Pages: 15 Date: July 30, 2007