The overall approach adopted following the ongoing process of integration and the associated intensification of external relations remains strongly informed by a boundary perspective. Whereas the country has accepted supervision of its external affairs, it aims to tightly control influences on the internal environment, particularly with regard to commercial interests and cultural penetrations. Bhutanese diplomacy has pursued three broad interrelated objectives: the preservation of the country's independent status; the safeguarding of the nation's sovereign integrity, including the promotion of nationhood and the conservation of its religious, cultural and ecological heritage; and the sponsorship of development and modernization processes whilst encouraging self-reliance (particularly within the economic sphere).

At the core of foreign policy is the relationship with India, with whom Bhutan is closely allied and heavily dependent on for independence, trade and aid. Relations could be described as intimate, with India as the principal development partner, providing significant technical and economic assistance, maintaining a military presence within the Kingdom and exercising significant influence over external affairs. Notably Bhutan has not become involved in any political brinkmanship, attempting to play off the agendas of its neighbors in an attempt to gain short-term advantage.

Following international integration, the country joined the Colombo Plan in 1962, the International Postal Union in 1969 and in 1971 became a member of the United Nations. Multilateral relations have been developed with SAARC, the UN and the EC. Personal bilateral relationships have been expanded to include Bangladesh, Japan, Denmark, Switzerland and the Netherlands. There is not a heavy NGO presence - there are representations from WWF and Save the Children- with the state favoring the consistent channeling of assistance through government institutions. Although remaining dependent on foreign aid, the extent of aid financing is limited by the objective of long-term self-sufficiency. Rare among developing countries, Bhutan does not try to attract as much assistance as possible, and does not accept all aid offered.

With porous borders, Bhutan cannot detach itself from regional issues of poverty, migration and instability. Although not a recent occurrence - there was already a significant presence by the turn of the Twentieth Century - the matter of Nepali migrants streaming through the southern border and settling within the country reached a head in the late 1980s and early 1990s. The insurgency was sparked off by a 1988 census that discovered thousands of illegal immigrants in the southern districts, a subsequent policy that set 1958 as the cut-off date for the granting of Bhutanese nationality and attempts at strengthening the national identity (which included the symbolic introduction of a national dress code). By the spring of 1990 events took a marked turn for the worse: the one side, buoyed by the recent "democratic" successes in Nepal, took to launching a campaign against the monarchy and the Royal Government; the other side stuck to its policy of expelling "illegals", labeling the rebels "anti-nationals". The manner in which violence escalated on both sides was exceptionally damaging, as allegiances swiftly polarized. The problem has now pretty much diffused, although the scars remain, and there is still the thorny issue of much-inflated refugee camps existing in limbo across the border. The fact that the public relations campaign was won by the rebels has led to many negative and imbalanced reports "by gullible, unprofessional, or sympathetic news organizations in Nepal and India … picked up thirdhand by the international press" (Crossette (1995:30)). The "Southern Problem" has unfortunately (and unfairly) come to define Bhutan and its prevailing regime in the international arena.

Although sadly destructive, the incident is instructive in highlighting certain national and regional political contexts. At its foundation is the regional population explosion (notably among the Nepali community), the subsequent exacerbation of poverty and substantial migratory movements across the Himalayan region. This massive and relentless influx is the major factor behind Sikkim's erosion of sovereignty and then loss of independence in 1974, and the instabilities associated with the Gorkhaland movement in the Darjeeling area. Neither of these changes proved particularly beneficial. The protective Bhutanese were acutely aware of these trends and sought to mitigate a similar situation. That a degree of heavy handedness was involved (albeit overstated) in the response to the agitation, particularly as it filtered down through society, may be explained within the national political culture. To have very openly criticized the King and challenged his rule was culturally unacceptable - tantamount to reacting against the nation itself - and threatened a key source of popular identity. Furthermore, although the conflict was couched in terms of national security, democracy and ethnicity, it is likely that individual agendas and personal politics may have been hugely influential on both sides. In this sense the situation may be interpreted as having developed from within the prevailing system, before a host of wider issues were incorporated.

Bhutan's inherent vulnerability to events unfolding all around it continues. No sooner had the "Southern Problem" abated than a possibly much more chronic one emerged. The nation's most critical current political issue centers on the presence of ULFA (United Liberation Front of Assam) and Bodo insurgents in southeastern Bhutan. These groups are fighting a well-supported and well-armed struggle against the Indian government. Settling in camps and interacting with the local population, they have come to use Bhutan as a safe-haven from advancing Indian military offensives. Anxious to protect its sovereignty, Bhutan has been reluctant to allow a sweeping Indian military campaign on its soil. However, the room for maneuver is continually reducing, with significant Indian pressure from one side and threats of major reprisals from the other. There is a very real danger that Bhutan may become embroiled in a war that has no direct relevance and potentially will have no conclusive winner. Already minor skirmishes have occurred and there has been much ecological destruction from uncontrollable poaching activities. However, such losses may appear negligible, as a dark threatening cloud hangs over the Land of the Thunder Dragon. That it should have blown in from outside is unsurprising, the unavoidable consequence of geographical and geopolitical realities.