Bhutan has diplomatic relations with 23 states. In 1971, sponsored by India, Bhutan began to develop its foreign relations by joining the UN, though it has no diplomatic relations with any of the permanent members on the UN Security Council. In 1981, Bhutan joined IMF and World Bank, followed by the World Health Organisation and UNESCO in 1982. It is also an active member of SAARC. Bhutan is currently a member of 45 international organisations.
Historically, ties with India have been close. Both countries signed a first ever Friendship treaty in 1865 between Bhutan and British India. However, when Bhutan became a monarchy, British India was the first country to recognise it and renewed the treaty in 1910. Bhutan was the first country to recognise Indian independence and renewed the age old treaty with the new government in 1949, including a clause that India would assist Bhutan in foreign relations. On February 8, 2007, the Indo-Bhutan Friendship TreatyPDF (30.6 KiB) was substantially revised under the Bhutanese King, Jigme Khesar Namgyel Wangchuck. In the Treaty of 1949 Article 2 read as "The Government of India undertakes to exercise no interference in the internal administration of Bhutan. The revised treaty also includes in it the preamble "Reaffirming their respect for each other’s independence, sovereignty and territorial integrity", an element that was absent in the earlier version. The Indo-Bhutan Friendship Treaty of 2007 strengthens Bhutan’s status as an independent and sovereign nation.
Bhutan has no diplomatic relations with its northern neighbour, the People’s Republic of China. The border between Bhutan and China has been closed since the invasion of Tibet in 1959, causing an influx of refugees. The border also remains undelineated; in 1961 China published a map that altered the traditional border. Tensions have since lessened, especially after the signing of a 1998 agreement on border peace and tranquility, the first bilateral agreement between China and Bhutan. Despite the lack of formal diplomatic relations, Bhutan has also maintained an Honorary Consul in Macau since 2000 and Hong Kong since 2004.
In late 2005, Bhutan claimed that Chinese soldiers were building roads and bridges within Bhutanese territory. Bhutanese Foreign Minister Khandu Wangchuk took up the matter with Chinese authorities after the issue was raised in the Bhutanese parliament. In response, Foreign Ministry spokesman Qin Gang of the People’s Republic of China has said that the border remains in dispute and that the two sides are continuing to work for a peaceful and cordial resolution of the dispute. The Bhutanese newspaper Kuensel has said that China might use the roads to further Chinese claims along the border.
Nepal and Bhutan established relations in 1983. However since 1992, relations with Nepal have been tense due to the repatriation of refugees from Bhutan.
Along with India, Bangladesh is one of the only two nations to have a residential embassy in Bhutan. The relationship between Bhutan and Bangladesh have always been positive since 1971 when the former became the first country to recognise Bangladesh after gaining independence from Pakistan. Both Bhutan and Nepal see Bangladesh as another access to the sea and an opportunity to be less dependent on India and China.
Bhutan has diplomatic relations with eight European nations: Belgium, Switzerland, Denmark, Sweden, Norway, the Netherlands, Finland and Austria, which form the "Friends of Bhutan" group, along with Japan which contributes towards development projects in Bhutan. Bhutan also has diplomatic relations with South Korea, Canada, Brazil, Australia, Kuwait, Thailand, Bahrain, the Maldives, Sri Lanka, and Pakistan. Other countries, such as the U.S. and U.K, have no formal diplomatic relations with Bhutan, but maintain informal contact through their respective embassies in New Delhi and Bhutanese honorary consulates in London and Washington DC.
The U.S. has offered to resettle 60,000 of the 107,000 Bhutanese refugees of Nepalese origin now living in seven U.N. refugee camps in southeastern Nepal. Six other nations—Australia, Canada, Norway, Netherlands, New Zealand and Denmark—have offered to resettle 10,000 each.
Other countries also operate resettlement programs in the camps. Norway has already settled 200 Bhutanese refugees, and Canada has agreed to accept up to 5000 through to 2012.
Bhutan cooperates with India to expel Indian Nagaland separatists; lacking any treaty describing the boundary, Bhutan and China continue negotiations to establish a common boundary alignment to resolve territorial disputes arising from substantial cartographic discrepancies, the largest of which lie in Bhutan’s northwest and along the Chumbi salient.