India
Relations between India and Bhutan are governed by the 1949 Treaty of Peace and Friendship. The treaty ensures India's neutrality in Bhutan's internal affairs, in exchange for Bhutan's agreement to be guided by India in foreign policy matters. India is Bhutan's largest donor and supplies approximately 80% of Bhutan's foreign assistance. In recent years, insurgents on the Indian side of the border from the United Liberation Front of Assam (ULFA) and the Bodos have used Bhutan as a safe haven. Bhutan has requested the insurgents to leave on several occasions in 2001 and 2002. However, the Bhutanese Government finds itself facing an increased number of insurgents in 2003 and has threatened military action against them if negotiations for their voluntary withdrawal fail in the next few months.

China
Bhutan and China do not have diplomatic relations, although border talks between the two nations have occurred.

Nepal
These two countries established diplomatic relations in 1983. Nepal and Bhutan are currently negotiating to resolve a 13-year-old refugee situation, in which 100,000 refugees are residing in seven UNHCR camps in Nepal. Most of the refugees claim they are Bhutanese citizens, while Bhutan alleges that most are non-nationals or "voluntary emigrants," who forfeited their citizenship rights. In 2003, a joint Bhutan-Nepal verification team categorized refugees from one camp into four groups. A repatriation process is expected to begin in 2004.

United Nations
Bhutan became a member of the United Nations in 1971. Bhutan does not have diplomatic relations with any of the permanent members of the U.N. Security Council. Bhutan was elected to the UN Commission on Human Rights in 2003 and will serve until 2006.

Other Countries
Bhutan enjoys diplomatic relations with seven European nations, which form The "Friends of Bhutan" group, together with Japan. These countries are Switzerland, Denmark, Sweden, Norway, the Netherlands, Finland, and Austria. Also known as donor nations, they contribute generously to Bhutanese development and social programs. Bhutan also has diplomatic relations with South Korea, Canada, Australia, Kuwait, Thailand, Bahrain, Bangladesh, the Maldives, Sri Lanka, and Pakistan.