Nestled between India and China, Nepal has historically served as a strategic location for international spying due to its porous borders, political instability, and proximity to regional superpowers.
The Himalayan nation of Nepal, nestled between India and China, has long been more than just a trekking paradise. Its geography, porous borders, and political vulnerabilities have turned it into a discreet staging ground for international espionage, money laundering, smuggling networks, and counterfeit currency distribution.
In Kathmandu’s quiet cafés, diplomatic compounds, and crowded markets, operatives representing rival governments often shadow one another, blending into the everyday bustle. Nepal’s open border with India, combined with its geographic proximity to China and Tibet, makes it an ideal setting for Western and Eastern intelligence services to establish networks and conduct surveillance operations far from prying eyes.
Kathmandu – The Strategic Nerve Center
For decades, Nepal’s capital has served as a listening post and logistics base for a wide range of intelligence activities. Among the most prominent:
- Monitoring military deployments in India and Pakistan.
- Tracking Tibetan activism and Chinese dissidents.
- Collecting information on regional terrorism and extremist groups.
- Economic espionage related to China’s Belt and Road Initiative and broader South Asian trade routes.
Nepal’s Geopolitical Battleground
Nepal’s strategic importance lies in its geography and its relatively weak security apparatus. Sandwiched between Asia’s two largest powers and bordering Tibet, the country offers an accessible yet discreet environment for covert operations. Even at the highest levels of the Indian government, concerns over this dynamic have been public.
Back in February 2000, then External Affairs Minister Jaswant Singh told Parliament that Pakistan’s Inter-Services Intelligence (ISI) was exploiting Nepalese and Bangladeshi territory for anti-India activities. Singh emphasized that India had raised these issues directly with Nepalese leaders.
Although Nepal’s governments in recent years have tried to strengthen security forces, improve border management, and avoid overreliance on any single power, its geography means it remains a magnet for clandestine manoeuvring.
CIA’s Shadow in Nepal
American interest in Nepal dates back to the early Cold War. Washington saw the country as a key vantage point to watch Communist China and events unfolding in Tibet. Nepal’s Mustang region became an operational base for one of the CIA’s boldest programs—supporting the Tibetan resistance movement.
In the 1950s and 60s, the CIA trained, armed, and funded the Chushi Gangdruk guerrillas to harass Chinese forces across the border. These covert missions were part of a larger plan to destabilize Chinese influence and gather intelligence on Beijing’s military moves in Tibet.
Even after the Tibetan guerrilla operations subsided, the CIA continued to monitor Nepal’s internal politics, especially during the Maoist insurgency of the 1990s, which threatened to reshape South Asia’s ideological balance.
KGB’s Counterweight
While the CIA established a foothold, the Soviet Union’s KGB saw Nepal as fertile ground to blunt Western influence. Throughout the Cold War, Moscow cultivated ties with Nepalese communists and left-leaning intellectuals. KGB operatives reportedly kept a close watch on U.S. and other Western diplomats in Kathmandu while also promoting Soviet cultural and educational initiatives.
Scholarships and exchange programs were used to extend Soviet soft power, and, in some cases, to recruit Nepalese students as informants. The KGB’s dual strategy—political infiltration and cultural outreach—helped Moscow exert influence across Nepalese institutions during the high tide of East–West rivalry.
ISI’s expanding footprint in Nepal
Among all foreign intelligence networks, Pakistan’s ISI has been especially active in Nepal since the late 1980s. Exploiting the open Indo-Nepal border, the ISI used Kathmandu as a staging ground to infiltrate Khalistani and Kashmiri militants, smuggle explosives and arms, and circulate high-quality counterfeit Indian currency printed in Pakistan.
Intelligence sources have long accused the ISI of running sleeper cells and providing logistical support to Islamist groups plotting attacks inside India. Nepal’s lax enforcement and weak borders gave these networks safe havens. According to U.S. diplomatic cables released by WikiLeaks, the ISI not only financed and organized militant fronts but also leveraged Nepalese businesses—such as carpet showrooms run by Kashmiri traders in Kathmandu—as cover for operations.
One cable from July 1997, signed by then U.S. Ambassador Frank Wisner, specifically linked ISI handlers in Pakistan-occupied Kashmir with Kathmandu-based operatives tasked to carry out bombings in India ahead of national elections. This pattern of using Nepal as a “nodal point” to dispatch men and material echoed in later Stratfor reports, which described Kathmandu as a meeting ground for training militants from Kashmir, Punjab, and India’s Northeast.
The evidence of this infiltration is stark: seizures of hundreds of kilograms of RDX along the border, widespread circulation of counterfeit currency, and the infamous hijacking of an Indian Airlines flight originating in Kathmandu. According to regional intelligence, even officials posted at Pakistan’s embassy in Nepal have been implicated in supporting or coordinating these activities.
A multipolar spy hub
Beyond the CIA, KGB, and ISI, Nepal has also drawn the attention of other major intelligence outfits:
RAW (Research and Analysis Wing): India’s premier external agency has historically sought to counter Pakistani and Chinese influence in Nepal. RAW closely follows Kathmandu’s political shifts and worked to keep Nepal within India’s strategic orbit during the Maoist insurgency.
MSS (Ministry of State Security): China’s intelligence arm keeps a tight focus on Tibetan refugees and has pressured Nepal to curtail anti-China demonstrations.
MI6 (UK Secret Intelligence Service): Britain maintains a low-profile presence, watching Islamist networks and regional security dynamics while collaborating on counterterrorism initiatives.
Mossad: Israel’s intelligence agency monitors potential threats to Israeli tourists and tracks Islamist activity, maintaining a limited but strategic presence in Nepal’s crowded intelligence landscape.
The future of Nepal’s security dilemma
Nepal’s geographic position at the crossroads of South and East Asia ensures it will remain a coveted base for covert operations. While Kathmandu has taken steps to bolster its intelligence agencies and pursue a balanced foreign policy, the overlapping interests of global powers continue to shape events on the ground.
For Nepal, the challenge is maintaining sovereignty and stability amid these competing pressures. For the region, Nepal’s status as a de facto intelligence crossroads underscores just how interconnected South Asia’s security dynamics have become. As global rivalries sharpen, this small mountain kingdom will likely remain at the heart of a vast, secretive struggle playing out far above the peaks of the Himalayas.
