Bhutanese history traces back to AD450. Bhutan has never been conquered or ruled by another foreign power. Guru Rinpoche is believed to have brought Mahayana Buddhism to Bhutan from Tibet in the eighth century. It first became a coherent political entity around the 17th century, under the direction of Tibetan lamas who established an administrative and political structure over the area.
In 1910, the British government took control of Bhutan's foreign affairs, while agreeing not to interfere with the internal ruling.
In 1947 and 1949, it was agreed that the Indian government advised Bhutan on external relations. Trade agreements with India, essential to sustain the Bhutanese economy, have been the subject of regular rounds of negotiation.
The presence on Bhutanese territory of Assamese and Bodoland guerrillas, seeking independence for their respective regions of northeast India, has also proved an irritant in bilateral relations. Bhutan has occasionally switched its support to its other great neighbour, China, particularly noticeable in international forums, such as the Non-Aligned Movement and the UN General Assembly, which Bhutan joined in 1971.
Neighbouring Nepal hosts an estimated 100,000 Bhutanese refugees housed in camps in the east of the country. Most are ethnic Nepalis whose citizenship is in dispute. (The Bhutanese population is divided between two main ethnic groups: the Nepalis and the Drupka.) The Nepali government wants them to return to Bhutan; the Bhutanese refuse to take them.
A key reason for Bhutan’s stance is that the main domestic challenge to the Bhutanese regime has come from the illegal and Nepali-dominated Bhutan People's Party (BPP).