• Representatives of the people elected by indirect vote every three years and comprising between half and two-thirds of the National Assembly membership
• Monastic representatives, also appointed for three-year terms and constituting about one-third of the membership
• Government officials nominated by the Druk Gyalpo.

The Bhutanese system of governance is in many respects unique in the world. It is a system that provides people with direct access to the nation's monarch, and which incorporates fora in which the people's elected representatives debate and make decisions on matters of national importance, with an agenda that is based upon the concerns and aspirations of local community. Evidence of the capacity of the system of governance for further evolution is provided by the importance accorded to decentralization aimed at further empowering local communities and at enlarging opportunities for them to share in decision-making on the future of the nation.

Under his reign, Bhutan established diplomatic relations with Switzerland, Denmark, Sweden, EEC, Norway and Netherlands Kuwait, Japan, Finland, South Korea, Austria, Thailand, Bahrain, Hongkong, Singapore, Macaw, Maldives, Sri Lanka, Pakistan, Bangladesh, India and Nepal.

Legal basis:

Bhutan does not have a written constitution or organic laws. The 1907 document submitted by the monastic and government leaders was an agreement only to establish an absolute hereditary monarchy. Bhutan's only legal or constitutional basis is the 1953 royal decree for the Constitution of the National Assembly. The 1953 constitution set forth eighteen succinct "rules" for the procedures of the National Assembly and the conduct of its members. The May 1968 revision reiterated and elucidated some of the eighteen rules but revised others. Beginning in 1969, the powers of the speaker of the National Assembly were strengthened, and the Druk Gyalpo's veto power was eliminated.

When the Chinese communists took over Tibet in 1951, Bhutan closed its frontier with Tibet and sided with its powerful neighbor to the south. To offset the chance of Chinese encroachment, Bhutan began a modernization program. Land reform was accompanied by the abolition of slavery and serfdom and the separation of the judiciary from the executive branch of government. Mostly funded by India after China's invasion of Tibet in 1959, the modernization program also included the construction of roads linking the Indian plains with central Bhutan.

An all-weather road was completed in 1962 between Thimphu and Phuntsholing, the overland gateway town on the southwest border with India. Dzongkha was made the national language during Jigme Dorji's reign.

Additionally, development projects included establishing such institutions as a national museum in Paro and a national library, national archives, and national stadium, as well as buildings to house the National Assembly, the High Court (Thrimkhang Gongma), and other government entities in Thimphu. The position of gongzim, held since 1907 by the Dorji family, was upgraded in 1958 to lonchen (prime minister) and was still in the hands of the Dorji. Jigme Dorji Wangchuck's reforms, however, although lessening the authority of the absolute monarchy, also curbed the traditional decentralization of political authority among regional leaders and strengthened the role of the central government in economic and social programs.

Modernization efforts moved forward in the 1960s under the direction of the lonchen, Jigme Palden Dorji, the Druk Gyalpo's brother-in-law. In 1962, however, Dorji incurred disfavor with the Royal Bhutan Army over the use of military vehicles and the forced retirement of some fifty officers. Religious elements also were antagonized by Dorji's efforts to reduce the power of the state-supported religious institutions. In April 1964, while the Druk Gyalpo was in Switzerland for medical care, Dorji was assassinated in Phuntsholing by an army corporal. The majority of those arrested and accused of the crime were military personnel and included the army chief of operations, Namgyal Bahadur, the Druk Gyalpo's uncle, who was executed for his part in the plot.

The unstable situation continued under Dorji's successor as acting lonchen, his brother Lhendup Dorji, and for a time under the Druk Gyalpo's brother, Namgyal Wangchuck, as head of the army. According to some sources, a power struggle ensued between pro-Wangchuck loyalists and "modernist" Dorji supporters. The main issue was not an end to or lessening of the power of the monarchy but "full freedom from Indian interference." Other observers believe the 1964 crisis was not so much a policy struggle as competition for influence on the palace between the Dorji family and the Druk Gyalpo's Tibetan mistress, Yangki, and her father. Nevertheless, with the concurrence of the National Assembly, Lhendup Dorji and other family members were exiled in 1965. The tense political situation continued, however, with an assassination attempt on the Druk Gyalpo himself in July 1965. The Dorjis were not implicated in the attempt, and the would-be assassins were pardoned by the Druk Gyalpo.

In 1966, to increase the efficiency of government administration, Jigme Dorji Wangchuck made Thimphu the year-round capital. In May 1968, the comprehensive Rules and Regulations of the National Assembly revised the legal basis of the power granted to the National Assembly. The Druk Gyalpo decreed that henceforth sovereign power, including the power to remove government ministers and the Druk Gyalpo himself, would reside with the National Assembly. The following November, the Druk Gyalpo renounced his veto power over National Assembly bills and said he would step down if two-thirds of the legislature passed a no-confidence vote. Although he did nothing to undermine the retention of the Wangchuck dynasty, the Druk Gyalpo in 1969 called for a triennial vote of confidence by the National Assembly (later abolished by his successor) to renew the Druk Gyalpo's mandate to rule.

Diplomatic overtures also were made during Jigme Dorji Wangchuck's reign. Although always seeking to be formally neutral and nonaligned in relations with China and India, Bhutan also sought more direct links internationally than had occurred previously under the foreign-policy guidance of India. Consequently, in 1962 Bhutan joined the Colombo Plan for Cooperative, Economic, and Social Development in Asia and the Pacific known as the Colombo Plan, and in 1966 notified India of its desire to become a member of the United Nations (UN). In 1971 after holding observer status for three years, Bhutan was admitted to the UN. In an effort to maintain Bhutan as a stable buffer state, India continued to provide substantial amounts of development aid.

Jigme Dorji Wangchuck ruled until his death in July 1972 and was succeeded by his seventeen-year-old son, Jigme Singye Wangchuck. The close ties of the Wangchuck and Dorji families were reemphasized in the person of the new king, whose mother, Ashi Kesang Dorji (ashi means princess), was the sister of the lonchen, Jigme Palden Dorji. Jigme Singye Wangchuck, who had been educated in India and Britain, had been appointed ponlop of Tongsa in May 1972 and by July that year had become the Druk Gyalpo. With his mother and two elder sisters as advisers, the new Druk Gyalpo was thrust into the affairs of state. He was often seen among the people, in the countryside, at festivals, and, as his reign progressed, meeting with foreign dignitaries in Bhutan and abroad.

His formal coronation took place in June 1974, and soon thereafter the strains between the Wangchucks and Dorjis were relieved with the return that year of the exiled members of the latter family. The reconciliation, however, was preceded by reports of a plot to assassinate the new Druk Gyalpo before his coronation could take place and to set fire to the Tashichhodzong (Fortress of the Glorious Religion, the seat of government in Thimphu). Yangki was the alleged force behind the plot, which was uncovered three months before the coronation; thirty persons were arrested, including high government and police officials.

Ugyen Wangchuck died in 1926 and was succeeded by his son, Jigme Wangchuck (reigned 1926-52). The second Druk Gyalpo continued his father's centralization and modernization efforts and built more schools, dispensaries, and roads. During Jigme Wangchuck's reign, monasteries and district governments were increasingly brought under royal control. However, Bhutan generally remained isolated from international affairs.

The issue of Bhutan's status vis-à-vis the government of India (was Bhutan a state of India or did it enjoy internal sovereignty?) was reexamined by London in 1932 as part of the issue of the status of India itself. It was decided to leave the decision to join an Indian federation up to Bhutan when the time came. When British rule over India ended in 1947, so too did Britain's association with Bhutan. India succeeded Britain as the de facto protector of the Himalayan kingdom, and Bhutan retained control over its internal government. It was two years, however, before a formal agreement recognized Bhutan's independence.

Following the precedent set by the Treaty of Punakha, on August 8, 1949, Thimphu signed the Treaty of Friendship Between the Government of India and the Government of Bhutan, according to which external affairs, formerly guided by Britain, were to be guided by India. Like Britain, India agreed not to interfere in Bhutan's internal affairs. India also agreed to increase the annual subsidy to 500,000 rupees per year. Important to Bhutan's national pride was the return of Dewangiri. Some historians believe that if India had been at odds with China at this time, as it was to be a decade later, it might not have acceded so easily to Bhutan's request for independent status.

Ugyen Wangchuck's emergence as the national leader coincided with the realization that the dual political system was obsolete and ineffective. He had removed his chief rival, the ponlop of Paro, and installed a supporter and relative, a member of the pro-British Dorji family, in his place. When the last shabdrung died in 1903 and a reincarnation had not appeared by 1906, civil administration came under the control of Ugyen Wangchuck. Finally, in 1907, the fifty-fourth and last druk desi was forced to retire, and despite recognitions of subsequent reincarnations of Ngawang Namgyal, the shabdrung system came to an end.

In November 1907, an assembly of leading Buddhist monks, government officials, and heads of important families was held to end the moribund 300-year-old dual system of government and to establish a new absolute monarchy. Ugyen Wangchuck was elected its first hereditary Druk Gyalpo (Dragon King, reigned 1907-26). The Dorji family became hereditary holders of the position of gongzim (chief chamberlain), the top government post. The British, wanting political stability on their northern frontier, approved of the entire development.

Britain's earlier entreaties in Lhasa had unexpected repercussions at this time. The China, concerned that Britain would seize Tibet, invaded Tibet in 1910 and asserted political authority. In the face of the Chinese military occupation, the Dalai Lama fled to India. China laid claim not only to Tibet but also to Bhutan, Nepal, and Sikkim. With these events, BhutaneseBritish interests coalesced.

A new Bhutanese-British agreement, the Treaty of Punakha, was signed on January 8, 1910. It amended two articles of the 1865 treaty: the British agreed to double their annual stipend to 100,000 rupees and "to exercise no interference in the internal administration of Bhutan." In turn, Bhutan agreed "to be guided by the advice of the British Government in regard to its external relations." The Treaty of Punakha guaranteed Bhutan's defense against China; China, in no position to contest British power, conceded the end of the millennium-long Tibetan-Chinese influence.

Much of Bhutan's modern development has been attributed by Bhutanese historians to the first Druk Gyalpo. Internal reforms included introducing Western-style schools, improving internal communications, encouraging trade and commerce with India, and revitalizing the Buddhist monastic system. Toward the end of his life, Ugyen Wangchuck was concerned about the continuity of the family dynasty, and in 1924 he sought British assurance that the Wangchuck family would retain its preeminent position in Bhutan. His request led to an investigation of the legal status of Bhutan vis-à-vis the suzerainty held over Bhutan by Britain and the ambiguity of Bhutan's relationship to India. Both the suzerainty and the ambiguity were maintained.