Political Structure, Demography, Ethnic Composition

In 2026, the once-isolated nation of Bhutan is working to project a modern image through its Five Year Plan. The plan emphasizes environmental responsibility and economic development grounded in public well-being. It is also shaped by a complex ethnic and political history. A small nation of just over 770,000 people, Bhutan consists of three main ethnic groups. The Ngalong in the west and the Sharchop in the east make up the Buddhist majority of the country. The Lhotshampa in the south are culturally Nepalese and Hindu. They began migrating to Bhutan in the 19^th century and became eligible for citizenship in 1958. Bhutan is a constitutional monarchy and has maintained its royal family since 1907, which is ethnically Ngalong. With cultural differences between the Ngalong and the Lhotshampa, and the increasing influence of the Lhotshampa community, displacement and conflict began escalating in the late 1970s.

The Citizenship Acts of 1977 and 1985

The Bhutan Citizenship Act of 1977 was passed to tighten citizenship requirements. The Act increased the required residency period by ten years and mandated knowledge of the Dzongkha language and Bhutanese history. The law also allowed the government to deny citizenship to individuals -and their relatives- who were deemed to have acted against the state, the King, or the people. A 1979 census applied these criteria to determine citizenship status. Following the census, only those identified as citizens were issued citizenship identity cards. The 1985 Citizenship Act tightened the citizenship requirements further. Naturalization required that both parents of a child be Bhutanese citizens if the child is to be one as well.

The 1988 Census and the “One Nation, One People,” Policy

Following the 1985 Act, a second census was conducted in 1988, limited to Southern Bhutan. Authorities targeted the Lhotshampa, refusing naturalization unless individuals could provide proof of residence dating to 1958, regardless of citizenship cards issued in 1979. In 1989, King Jigme Singye Wangchuck delivered the “One Nation, One People,” decree. The decree required all citizens to adopt northern Bhutanese clothing, language, values, and etiquette. The government also removed Nepali-language curricula from southern Bhutanese schools. The Lhotshampa saw this as an attack on them and organized mass demonstrations across the country in 1990.

Retaliation and Removal

The government responded with mass arrests. Detention conditions were poor, and more than 2,000 people were reportedly tortured. Reports by Human Rights Watch document deaths in detention during this period. The same reports describe security operations in southern Bhutan, including the burning of houses and sexual violence against women and girls by state personnel. During the protests, the government suspended educational and health services to southern Bhutan. In 1990, detained Lhotshampa individuals were released on the condition that they leave Bhutan by the end of the year. Individuals classified as non-citizens in the 1988 census were all required to leave the country or face detention. Authorities forced them to sign “voluntary migration forms”  that revoked their right to remain.

The Aftermath

According to the U.S. Department of State, over 100,000 Lhotshampas fled to refugee camps in Nepal in the 1990s. Bhutan and Nepal held bilateral repatriation talks from 1992 to 2007. These negotiations did not result in any large-scale returns. In 2007, the UN and eight global partner countries came together to initiate a resettlement program.  The participating states were Australia (repatriating 5,554 people), Canada (6,500), Denmark (874), New Zealand (1002), the Netherlands (327), Norway (566), the United Kingdom (358) and the United States of America (84,819). Approximately 7,000 refugees remained in camps in Nepal as of the latest figures from 2021.

Bhutan Today

The monarchy has progressively ceded power to the people since the 1990s. Since King Jigme Khesar Namgyel Wangchuck rose to the throne in 2006, the government has implemented constitutional governance structures. In 2008, Bhutan adopted a constitution that established three branches of government: judicial, legislative, and executive. The King serves as head of state and retains executive authority under the Constitution. The legislative branch does have the power to force the King to abdicate if needed. King Jigme has been focused on modernizing Bhutan through foreign direct investments. Bhutan graduated from the United Nations list of Least Developed Countries in 2023.

Gross National Happiness

The Government of Bhutan has adopted Gross National Happiness (GNH) as a policy framework, prioritizing GNH instead of GDP to guide its policy. GNH is referenced in Article 9 of the 2008 Constitution. Bhutan’s GNH Index seeks to measure progress in nine domains: psychological wellbeing, time use, community vitality, cultural diversity, ecological resilience, living standard, health, education, good governance. These domains are used to assess overall societal well-being, focusing on multi-dimensional happiness. This system was put in place to incentivize the government to put the wellbeing of the people first.

Bhutan’s Economy

While Bhutan has made significant economic progress, it faces growing emigration among its educated young people. A 2024 report from the World Bank found that 25,363 Bhutanese migrants are living in Australia, with 53% holding a university degree. This trend suggests a growing emigration of educated young Bhutanese workers in recent years. To turn the tide and advance the country’s economy, the government is making efforts to diversify the economy beyond tourism and hydropower sectors. About 99.7% of the country’s energy is generated from hydropower, much of which is exported to India. This has the effect that Bhutan is the world’s only carbon negative country. Combined with its vast forests, Bhutan offsets more than four times the carbon its emits. Bhutan is also designing and building its first major city in the area of Gelephu. Official statements describe the project as incorporating environmental sustainability, biodiversity protection, and cultural preservation. Gelephu is proposed to be the new hub for business and investment in the region.

The Duality of Bhutan

Over the past two decades, Bhutan has made significant economic progress, yet the country’s advancement is complicated by past and ongoing controversies. While democracy is persevering in the nation and Freedom House rates it as a free nation, authorities have recently used libel and defamation lawsuits to silence journalists. Gelephu is being built on land that was previously inhabited by the Lhotshamapa. But as of 2026, they are not permitted to return, having been labeled anti-nationals.