As expected, given the 1949 treaty signed between India and Bhutan, India plays a major role in Bhutan's relations with the rest of the world. However, beginning in the late 1970s, Bhutan began moving away from its reliance on India for guidance in foreign affairs. The country has played a more independent role in the nonaligned movement and has joined a number of international organizations including the World Bank, the International Monetary Fund, and the Asian Development Bank. A major break with previous practices occurred in 1980 when the country established direct diplomatic relations with Bangladesh and allowed that country to open an embassy in the capital city, Thimphu. It has also entered into direct negotiations with China to resolve a border dispute between the two countries. The influence of India persisted, however, since most countries have their representative to Bhutan in New Delhi rather than Thimphu. In 1985, Bhutan was a founding member of the South Asian Association for Regional Cooperation (SAARC).
In early 2002 Bhutan and India convened the twelfth Border District Coordination Meeting (BDCM) with the goal of clarifying issues of mutual interest and resolving disputes, especially related to the two countries' shared border. Issues on the agenda included the possibility of building a wall to separate the countries and improve security, since the areas along the border were being used by Indian militant groups. 2002 saw continued violence by these militant groups and, in August of that year, Bhutan and India again promised to address the issue.
Contact with other countries remains limited. The country retains quotas on the number of tourists allowed to visit despite the purchase in 1988 of its first passenger jet in order to promote tourism. Tourist arrivals in 1999 numbered about 7,000. The Department of Tourism increased tourist fees for 2001 to control the growth of the tourist industry. No formal diplomatic relations exist between the United States and Bhutan although the U.S. State Department has indicated that informal and friendly contact is maintained between the two countries.
In the late 1990s, significant changes occurred reflecting the king's interests in increased—but controlled—contact with the world beyond Bhutan. In late 1998, for the first time ever, foreign (non-Indian) financial institutions were allowed to purchase shares in the Bhutan National Bank. And in 1999, after two years of debate, officials allowed the nation to be connected to the global Internet and to receive television broadcasts (the latter changes in part came about because of the king's avid interest in basketball). It remained to be seen how such changes will impact Bhutan and its people.