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Historically, Bhutan's foreign policies were greatly influenced by Tibet. Bhutan acknowledged Tibet's influence over it until 1860 and continued to pay a nominal tribute to Tibet until the mid 1940s, although not necessarily on friendly basis. Despite religious and cultural affinities, most of Bhutan's elite were refugees who had fled Tibet for religious reasons over the centuries. From 1865 to 1947, Britain guided Bhutan's foreign affairs.

Thereafter Bhutan's foreign relations until the early 1970s were under the guidance of India, with which Bhutan had official diplomatic relations from 1949. During the 1970s and 1980s, however, Bhutan became a member of the UN and its affiliated agencies; established formal diplomatic relations with fifteen other nations, primarily in South Asia and Scandinavia; actively participated in the South Asian Association for Regional Cooperation and the Non-Aligned Movement; spoke out against, among other subjects, nuclear proliferation and terrorism; and had a peripatetic head of state who traveled abroad widely. By the early 1990s, Bhutan's foreign policies were effectively autonomous.

A shortage of diplomatic officials limited Thimphu's missions in New York and Geneva (established in 1985) and meant that the nation could only staff embassies in New Delhi, Dhaka, and Kuwait. Bhutan had only one employee, a computer programmer, at the SAARC headquarters in Kathmandu in late 1990. Only India and Bangladesh had representatives in Thimphu in 1991; other nations generally gave dual accreditation to their ambassadors in New Delhi to enable them to represent their countries' interests in Thimphu.

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