Nepal’s geographical position has assumed renewed strategic salience amid intensifying competition between the United States and China. While this creates opportunities, it also exposes Nepal to external vulnerabilities. 

Nepal’s position between contending great powers demands a minimum credible deterrence posture that reinforces, rather than subverts, its non-aligned foreign policy. For an economically constrained state, however, minimum credible deterrence cannot stem from amassing conventional military build-up. It hinges upon resilient government institutions, effective governance, diplomatic capacity and robust inter-agency coordination. This requires foreign and security policies to serve as mutually supporting pillars of sovereignty. 

Nepal’s legal framework already provides the institutional architecture for defence diplomacy. Ministry of Foreign Affairs (MoFA) derives its legal mandate to advance and defend the nation’s fundamental security interests from Part III of the National Security Policy (2073). This framework explicitly recognises diplomacy and international cooperation as strategic instruments to bridge security gaps and compensate for the limitations of conventional military power. 

MoFA’s role is further institutionalised through its statutory membership in the National Security Council (Article 266), its proposed role in the National Intelligence Bill (2082), and its responsibilities under the UN Peacekeeping Resource Hub and Policy Guidance. Together with Schedule 5 (Article 51), the Government of Nepal Allocation of Business Rules, and the Vienna Convention on Diplomatic Relations (1961), MoFA is established as the government’s principal institution for integrating diplomacy within Nepal’s national security framework. 

These provisions require MoFA to discharge its security-related responsibilities through a formalised, coordinated mechanism, in partnership with the Ministry of Defence (MoD) and the Nepali Army (NA). Despite this clear mandate, MoFA has struggled to entrench and elevate its position within Nepal’s security architecture. Part of this disconnect stems from conceptual ambiguity. Policy discourse in Nepal routinely treats ‘defence’ and ‘security’ interchangeably, reinforcing the perception that national security and deterrence rest predominantly with the Army. 

Nonetheless, defence is not synonymous with security. It is merely an instrument for realising it. While security is the broader condition, it spans non-conventional threats that force alone cannot address—a distinction that makes it a shared institutional responsibility. Conflating security with militarisation narrows the concept and obscures civilian institutions’ accountability, most notably MoFA. This conceptual ambiguity forces foreign and defence policy to operate in isolation, rendering meaningful defence diplomacy impossible. 

Modern foreign policy addresses this gap through defence diplomacy—a strategic instrument for the peaceful deployment of defence resources, personnel, credibility and networks to deepen international partnerships and advance foreign policy objectives. It extends beyond traditional military-to-military engagement, offering civilian authorities a complementary mechanism to navigate sensitive bilateral and multilateral relations, cultivate strategic trust, and support broader national security interests. Great power dynamics, such as the U.S.-Iran conflict, illustrate the coercive application of defence instruments to achieve its foreign policy objective of altering Tehran’s strategic calculus. By contrast, for Nepal, defence diplomacy functions as a soft-power instrument to deter security threats, build institutional resilience, strengthen diplomatic bargaining positions, and create conditions conducive to advancing vital foreign policy goals. 

Nepal’s fiscal and structural constraints compel the government to seek external defence assistance and international cooperation to mitigate the gaps in security modernisation. Although the defence budget for fiscal year 2026-27 increased by nearly Rs3 billion, most of this will offset recurrent expenditure rather than support modernisation. This requires MoFA to identify low-risk partners and develop country-specific diplomatic strategies. Yet it cannot do so effectively without MoD and the Army. Conversely, those two institutions need MoFA’s diplomatic proficiency to assess broader foreign policy implications. Unfortunately, a policy disconnect in the National Foreign Policy (2077) forestalls inter-agency coordination. 

This disconnect also limits Nepal’s ability to translate defence assets into foreign policy gains. Through decades of peacekeeping, Nepal has earned considerable defence soft power (international credibility, professional networks, and a reputation for neutrality and global peace). Yet these assets remain under-leveraged for wider economic, technology and development objectives. Despite peacekeeping deployments in Africa since 1974, African countries have accounted for only  1 to 2 percent of Nepal’s international trade. Although MoFA commands the diplomatic channels to translate defence assets into sustained bilateral and multilateral partnerships, without systematic coordination, Nepal will continue to struggle to capitalise on this domain. 

More critically, contemporary security challenges demand unified diplomatic judgement alongside specialised security assessments. Conflicting state responses to the US State Partnership Program (SPP) and China’s Global Security Initiative (GSI) exposed the hazards of fragmented institutional evaluations. Furthermore, the crisis involving Nepalis in Russia, the GCC, Iraq, Israel and transnational cyber-scam centres underscores the pressing need for joint real-time threat assessments and proactive contingency planning. The systemic void, then, is the absence of an integrated framework that prevents cohesive interpretation of a critical situation. 

As the National Planning Commission prepares ‘Vision 2050’, are Nepal’s security institutions, assessments, and foreign policies equipped to underwrite this ambition amid increasingly complex security challenges? Lee Kuan Yew, known for Singapore’s progressive economic reforms, regarded national security and political stability as indispensable prerequisites for economic sustainability. ‘Without order and security,’ he argued, economic progress is impossible. Perhaps the new government should heed this lesson. 

The present political transition offers an opportunity to correct this institutional disconnect. If the new government intends to respond strategically and decisively to emerging security challenges, it must move beyond the traditional isolation of the security apparatus from mainstream governance and foreign policy discourse. However, being responsive does not mean militarising foreign policy or abandoning non-alignment. Rather, Nepal could move beyond passive neutrality, which seeks security by avoiding strategic exposure, and enforce non-alignment through resilient neutrality, which seeks security by building the capacity to withstand it.