Nepal’s political transition following the Gen Z revolution unfolds against a fractured world order. The message from this year’s World Economic Forum in Davos was blunt: The post–Cold War, rules-based international order is unravelling, and no new system has yet replaced it. Power, not principle, is once again shaping global affairs.

Canada’s Prime Minister Mark Carney captured the moment when he argued that today’s international system is defined by three realities: the collapse of the old order, the weaponisation of economic tools such as trade and finance, and the growing need for pragmatic cooperation among middle and small powers. His remarks echoed Finnish President Alexander Stubb’s warning at last year’s UN General Assembly that small states can no longer rely on global rules alone and they must actively shape outcomes through smart diplomacy.

For Nepal, these global shifts could not be more consequential. The country now faces a world that is increasingly fragmented, transactional and unforgiving to small states. At the same time, Nepal is undergoing a historic political transition driven by the Gen Z movement that has disrupted entrenched power structures and unsettled established diplomatic ties.

BP Koirala’s famous 1960 UN speech, Small Nations Have a Role to Play, argued that countries like Nepal could defend their sovereignty by judging each issue on its merits and resisting bloc politics. This principle helped Nepal survive the Cold War. But today’s multipolar and interdependent world demands a more flexible approach.

The rise of ‘nation-first’ policies has weakened multilateralism and eroded the global environment that once allowed neutrality or non-alignment to survive. The global economy is now deeply entangled with geopolitics. International trade, technology, financial systems, energy and supply chains have become tools of influence and coercion.

In today’s geopolitical landscape, countries like Nepal face stark risks: limited bargaining power, economic vulnerability and shrinking policy space at the global level.

The erosion of multilateral institutions has further weakened the voice of small states. Today, ad hoc ‘coalitions of the willing,’ led by powers such as the US, European Union (EU), Russia, and China, set the agenda, leaving developing countries to adjust or be marginalised.

In a rapidly changing world, Nepal needs to recalibrate its foreign policy after the upcoming elections, focusing on relevance, institutional strength, and clear strategic direction.

Nepal’s post–Gen Z political shift has energised its youth and disrupted the entrenched elites who dominated power for the last three decades. Yet this transformation has also created uncertainty in foreign relations, with traditional interlocutors displaced and foreign partners unsure how to engage with the emerging political leadership.

The government’s early neglect of the foreign affairs portfolio, sudden ambassadorial recalls, and lack of high-level diplomatic outreach—even to neighbouring countries to build trust—have created a diplomatic vacuum, compounded by claims from some quarters that Nepal’s Gen Z revolution is shaped by foreign interests.

Even more concerning, Nepal’s foreign policy has swung between perceived ‘pro-India’ and ‘pro-China’ stances. If such inconsistency persists in the country’s future politics, it will further erode trust and open the door to external influence.

The question now is: How can Nepal shift from ideological signalling to building a foreign policy that delivers real influence and results?

First, Nepal should learn from global examples that success and survival hinge on flexibility, institutional strength and issue-based cooperation rather than clinging to strict neutrality and non-alignment. For example, Singapore balances deep economic ties with China while maintaining strong defence cooperation with the US, without formally aligning with either.

Similarly, Vietnam trades heavily with both China and the US while asserting strategic autonomy through diversified partnerships. India’s foreign policy has transitioned from traditional non-alignment to a strategy of multi-alignment and strategic autonomy, engaging simultaneously with Russia, the West, and regional powers based on interest rather than ideology. Finland, once constrained by Cold War geopolitics, now leverages multilateral diplomacy and economic integration to amplify its global voice.

Thus, a key lesson for Nepal is that it can integrate geoeconomics into foreign policy even in a fractured world order by adopting strategic, multi-dimensional approaches that balance national interests with global opportunities.

For example, Nepal’s ties with India, shaped by geography, history and deep economic links, are unavoidable yet negotiable, especially in mutually beneficial areas like cross-border roads and railways, integrated checkpoints, hydropower investment and grid integration. With China, Nepal should adopt a selective, project-based approach to Belt and Road Initiative investments, focusing solely on economically viable projects that leverage China’s expertise in technology and infrastructure.

Partnerships with Japan and South Korea can advance quality infrastructure, earthquake-resilient construction, smart city development, and e-governance modernisation. Meanwhile, engagement with the EU can be expanded in climate resilience and justice, while collaboration with both the EU and the US can drive digital governance, cybersecurity and open digital standards.

Crucially, by diversifying markets, investment sources, energy supplies, and technology partnerships, Nepal could avoid overdependence on a single power, guard against coercion, and maintain strategic leverage in its economic relations.

While military-to-military relations (including joint training and exercises with India, China, the US, and others) should continue, Nepal must avoid joining any security or defence bloc to maintain a strategic balance in its national security.

Second, Nepal must harness its soft power as a deliberate tool to advance its foreign policy objectives. Nepal’s enduring advantage is neither force nor wealth, but the moral credibility it commands on the world stage, including its legacy of peace, pluralism, UN peacekeeping, and its position as the birthplace of Buddha. Its climate vulnerability in the Himalayas also gives Nepal a powerful voice in global climate diplomacy. More recently, cricket is emerging as a strategic soft power for Nepal, enabling the country to engage neighbours, showcase its talent, and strengthen people-to-people diplomacy across the world.

Third, Nepal’s diplomatic ambitions must be backed by the resources and capacity to execute them effectively to achieve tangible results. Nepal’s Ministry of Foreign Affairs has only around 400 core staff, compared to Sri Lanka’s 1,500–1,600, despite similar regional challenges.

In the wake of the Gen Z revolution, Nepal faces a world increasingly defined by political instability and uncertainty. Whether Nepal emerges as a confident, sovereign actor or remains vulnerable to external pressures will depend on how boldly and intelligently it reimagines its foreign policy—now, at this critical political moment.