Executive Summary

This report examines the immediate economic and political consequences in Nepal stemming from youth-led protests across the country, which were sparked by the government’s social media ban, as well as wider issues of corruption and youth unemployment.

Mass demonstrations in Kathmandu and other cities produced between 15 and 19 fatalities, over 100 injuries, large-scale damage to government infrastructure including the torching of the parliamentary complex, and the resignation of Prime Minister KP Sharma Oli.

The instability underscores significant strains on leadership, the departure of workers, and the danger of greater foreign interference, as Kathmandu attempts to secure rebuilding aid and political stability.

Key Takeaways

1. Following extensive youth protests against widespread corruption and political advantage, Prime Minister KP Sharma Oli resigned.
2. Economic pressures are significant, with youth unemployment approaching 20%, and persistent, substantial labour migration fuelling public discontent.
3. Because of the security response and damage to the state’s infrastructure, political instability has increased in the short term, thus providing opportunities for foreign entities involved in infrastructure financing and strategic influence.

Background Information

The Nepalese government’s choice to ban various social media sites, such as Facebook, X, and YouTube, sparked protests mainly by young Nepalese citizens, which news outlets called the “Gen Z protest.” Officials briefly reopened access, but the protests grew to encompass enduring grievances regarding corruption, disparity, and the opulent lives of politicians’ relatives.

Clashes between security forces and the protesters resulted in the deaths of 15 to 19 people and injuries to over 200 others. Protesters set fire to government property and reportedly torched the Singha Durbar government complex. Attackers also attacked media outlets and publisher facilities.

Facing escalating unrest and a deteriorating security environment, Prime Minister KP Sharma Oli resigned. The UN, along with human rights groups, demanded investigations and urged everyone to be cautious, and the army’s leader asked protesters to end their protests and engage in discussion.

Geopolitical Scenario

Nepal occupies a strategic position between China and India and maintains relations with the United States; these relationships shape the state’s options following a domestic crisis.

China has increased its financial support for infrastructure projects and strengthened partnerships, such as through the Belt and Road Initiative, which has resulted in investments in hydropower and airports that can aid in reconstruction but also lead to uneven dependencies. India maintains strong cultural, economic, and security ties, and will aim to keep its influence as Nepal manages its governance decisions after the crisis. The United States pursues engagement as part of broader Indo-Pacific objectives.

Because of Nepal’s political instability and the government’s apparent weakness, Kathmandu’s ability to negotiate has diminished, which increases the likelihood that external actors will set strategic terms or gain influence fast with money and expert help.

Domestic actors face constraints: the resigned prime minister and party leaders are facing public delegitimization; the security forces must balance public-order duties with international human-rights scrutiny; and protest leaders — notably youth figures using restored social platforms — can sustain mobilisation while lacking institutional levers for negotiation.

Kathmandu’s priority is to reinstate essential governance and allow humanitarian aid to flow freely, without leaving its control over policy to outside creditors or security partners.

Indicators to Monitor

• Future protests in Kathmandu and provinces: frequency, scale, and leadership.
• Government actions: investigating security force abuses, fatalities.
• Requests for external financial or reconstruction aid, including deals with China or India.
• Labour migration, remittance data, or statements confirming a change from the reported 2,000 daily departures.
• Digital governance changes: new laws, platform registration enforcement, or renewed info flow restrictions.
• Behaviour of security forces: rules of engagement revisions, deployment patterns, and presence of specialised units or military involvement in civilian governance.
• Media freedom incidents followed the targeting of Kantipur Media Group and other publishers.

Conclusion

Nepal’s protests and the government’s fall highlight significant political and economic vulnerabilities, such as high youth unemployment, extensive labour migration, and persistent allegations of corruption.

Immediate priorities are to ensure civilian protection, guarantee medical access to the injured, and undertake transparent investigations into the use of force. Authorities, protest representatives and international agencies should pursue negotiated stabilisation that preserves domestic accountability while preventing opportunistic strategic encroachment.

*Cover image: Nepalese Gen Z protesters infront of Bharatpur mahanagarpalika office (Credits: हिमाल सुवेदी, CC BY-SA 4.0, via Wikimedia Commons)