Four months after elections that saw the Maoist party removed from power and the resurgence of its rivals in the Nepali Congress and United Marxist-Leninist (UML) parties, little progress has been made on a new constitution in Nepal. A new, properly constructed constitution will lead to stability, and stability in this part of the world is important to the United States.

Newly elected Prime Minister Sushil Koirala has promised completion of a new constitution within the next year. To do so, he must build consensus within a new Constituent Assembly (which serves both as parliament and the body which will draft the new constitution) led by a coalition of his Nepali Congress party and the UML. It was this stalemate that left the previous Constituent Assembly unable to reach an agreement on federalism and a form of government that led to the Maoists’ major losses in the recent election.

The proposed “fast-track model” of writing the new constitution limits the number of Constituent Assembly committees and eliminates many procedural rules, which had hindered the previous assembly.

Nepal was ranked the seventh most unstable country in Asia by the Fund for Peace’s Failed States Index for 2013. Nepal’s political instability is of concern primarily because of its location, sandwiched between the rising economic powers of China and India. In a recent talk at The Heritage Foundation, the American Foreign Policy Council’s Jeff M. Smith highlighted the recent history of the disputed border areas between China and India.

Because of Nepal’s strategic location, both China and India will be following the progress of the fledgling democracy in Nepal closely. Experts should keep an eye on these regional relationships to understand how they affect the larger strategic picture in Asia.

Relations between Nepal and India are particularly close with their shared linguistic, religious, and cultural links, and approximately 4 million Nepali migrant workers currently working in India. Indian ambassador to Nepal Ranjit Ray played a key role in the resolution of the Nepali political crisis in 2006. Trade between the two countries totaled $3.21 billion in fiscal year 2010.

In 2006, widespread demonstrations resulted in the ousting of King Gyanendra and eventually the formal end of monarchical rule in Nepal. The Maoists and the elected parliament signed a peace agreement ending a 10-year insurgency in the country. This cleared the way for a process of electing a Constituent Assembly to determine what form the new government will take.

Eight years later, however, this process is yet to be completed. Koirala’s ability to conclude the constitutional process depends largely on whether he can manage internal power struggles within the Nepali Congress-UML coalition government. If he can do so, Nepal may finally be able to capitalize on the peace accord and strengthen the country’s democratic foundations, leading to a new opportunity for stability in a key strategic region of Asia.

James Banks is currently a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please click here.