The country of 800,000 people, wedged between giant neighbours China and India and known for its Gross National Happiness index, has now chosen a different party to rule at each election since the end of absolute monarchy in 2008.
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The centre-left Druk Nyamrup Tshogpa (DNT), which was only formed in 2013, won 30 of the 47 national assembly seats, according to the provisional results released by Bhutan's election commision. Official results are to be announced Friday.
Druk Phuensum Tshogpa (DPT) secured the other 17 seats in the runoff contest limited to the two parties who led a first round of voting in September. The last ruling party was excluded in the contest.
DNT leader Lotay Tshering, a 50-year-old urology surgeon who trained in Bangladesh and Australia, vowed to work for "nation building" in the country which is battling high foreign debt, mainly owed to India, as well as youth employment, rural poverty and criminal gangs.
Both parties had vowed to boost the economy with Tshering's party using the slogan "Narrowing The Gap".
The election saw a 70 percent turnout and record 11 women win seats.
The DPT, which won Bhutan's first election in 2008 but did not get a seat in the 2013 vote, had wanted to accelerate the building of hydropower plants which dominate the economy, with electricity mainly exported to India.
The DNT has been more wary about increasing Bhutan's debt to pay for more power plants.
New friends needed
Hydropower financing -- which comes to more than $1.5 billion -- accounts for more than 80 percent of Bhutan's foreign debt. Most is owed to India, which has financed four out of five of the kingdom's new hydro-electric projects.
Bhutan has tried to shield itself from the downsides of globalisation, striving for "Gross National Happiness" over GDP growth, maintaining a carbon-negative economy and keeping tourist numbers down with a daily fee of $250 per visitor in high season.
While Bhutan is proud of its cultural and political independence and has diplomatic relations with barely 50 countries, it knows it will have to open up.
Foreign policy was kept out of the election campaign however. During the 2013 campaign, fearing that Bhutan was moving too close to China, India withdrew subsidies for kerosene and cooking gas imports, in what was seen as an attempt to coerce a change of government.
Relations with India remain sensitive. At least five candidates and activists were fined up to two month's wages for sending instant messenger statements to groups on relations with India, the Bhutan election commission said.
Last year India and China became embroiled in a military standoff over the Doklam plateau claimed by China and Bhutan, and which sits on a strategic corner where the three countries meet.
jpegMpeg4-1280x720India, which has a military presence in Bhutan, stepped in to prevent Chinese border guards from building a road there.
Even though Bhutan does not have diplomatic ties with Beijing, its giant neighbour is the third biggest source of imported goods and wealthy Chinese tourists are a valuable new source of income.
A growing number of Bhutanese feel the country should rely less on India and give China and others a chance to boost the economy and create new jobs. "Bhutan should make friends with other countries," said taxi driver Kinzang Dorji.
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