Nicaragua takes its name from Nicarao, chief of the indigenous tribe then living around present-day Lake Nicaragua. In 1524, Hernandez de Cordoba founded the first Spanish permanent settlements in the region, including two of Nicaragua's two principal towns: Granada on Lake Nicaragua and Leon east of Lake Managua. Nicaragua gained independence from Spain in 1821, briefly becoming a part of the Mexican Empire and then a member of a federation of independent Central American provinces. In 1838, Nicaragua became an independent republic.
Much of Nicaragua's politics since independence has been characterized by the rivalry between the Liberal elite of Leon and the Conservative elite of Granada, which often spilled into civil war. Initially invited by the Liberals in 1855 to join their struggle against the Conservatives, an American named William Walker and his "filibusters" seized the presidency in 1856. The Liberals and Conservatives united to drive him out of office in 1857, after which a period of three decades of Conservative rule ensued.
Taking advantage of divisions within the Conservative ranks, Jose Santos Zelaya led a Liberal revolt that brought him to power in 1893. Zelaya ended the long-standing dispute with Britain over the Atlantic Coast in 1894, and reincorporated that region into Nicaragua. However, due to differences over an isthmian canal and concessions to Americans in Nicaragua as well as a concern for what was perceived as Nicaragua's destabilizing influence in the region, in 1909 the United States provided political support to Conservative-led forces rebelling against President Zelaya and intervened militarily to protect American lives and property. Zelaya resigned later that year. With the exception of a nine-month period in 1925-26, the United States maintained troops in Nicaragua from 1912 until 1933. From 1927-1933, U.S. marines stationed in Nicaragua engaged in a running battle with rebel forces led by renegade Liberal general Augusto Sandino, who rejected a 1927 negotiated agreement brokered by the United States to end the latest round of fighting between Liberals and Conservatives.
After the departure of U.S. troops, National Guard Commander Anastasio Somoza Garcia outmaneuvered his political opponents, including Sandino, who was assassinated by National Guard officers, and took over the presidency in 1936. Somoza, and two sons who succeeded him, maintained close ties with the U.S. The Somoza dynasty ended in 1979 with a massive uprising led by the Sandinista National Liberation Front (FSLN), which since the early 1960s had conducted a low-scale guerrilla war against the Somoza regime.
The FSLN established an authoritarian dictatorship soon after taking power. U.S.-Nicaraguan relations deteriorated rapidly as the regime nationalized many private industries, confiscated private property, supported Central American guerrilla movements, and maintained links to international terrorists. The United States suspended aid to Nicaragua in 1981. The Reagan Administration provided assistance to the Nicaraguan Resistance and in 1985 imposed an embargo on U.S.-Nicaraguan trade.
In response to both domestic and international pressure, the Sandinista regime entered into negotiations with the Nicaraguan Resistance and agreed to nationwide elections in February 1990. In these elections, which were proclaimed free and fair by international observers, Nicaraguan voters elected as their president the candidate of the National Opposition Union, Violeta Barrios de Chamorro.
During President Chamorro's nearly seven years in office, her government achieved major progress toward consolidating democratic institutions, advancing national reconciliation, stabilizing the economy, privatizing state-owned enterprises, and reducing human rights violations. In February 1995, Sandinista Popular Army Commander General Humberto Ortega was replaced, in accordance with a new Military Code enacted in 1994, by General Joaquin Cuadra, who has espoused a policy of greater professionalism in the renamed Army of Nicaragua. A new police organization law, passed by the National Assembly and signed into law in August 1996, further codified both civilian control of the police and the professionalization of that law enforcement agency.
The October 20, 1996 presidential, legislative, and mayoral elections were also judged free and fair by international observers and by the ground-breaking national electoral observer group "Etica y Transparencia" (Ethics and Transparency) despite a number of irregularities, due largely to logistical difficulties and a baroquely complicated electoral law. This time Nicaraguans elected former-Managua Mayor Arnoldo Aleman, leader of the center-right Liberal Alliance. More than 76% of Nicaragua's 2.4 million eligible voters participated in the elections. The first transfer of power in recent Nicaraguan history from one democratically elected president to another took place on January 10, 1997, when the Aleman government was inaugurated.