The only inhabitants of Uruguay before European colonization of the area were the Charrua Indians, a small tribe driven south by the Guarani Indians of Paraguay. The Spanish discovered the territory of present-day Uruguay in 1516, but the Indians' fierce resistance to conquest, combined with the absence of gold and silver, limited settlement in the region during the 16th and 17th centuries. The Spanish introduced cattle, which became a source of wealth in the region. Spanish colonization increased as Spain sought to limit Portugal's expansion of Brazil's frontiers. Montevideo was founded by the Spanish in the early 18th century as a military stronghold; its natural harbor soon developed into a commercial center competing with Argentina's capital, Buenos Aires.
Uruguay's early-19th century history was shaped by ongoing fights between the British, Spanish, Portuguese, and colonial forces for dominance in the Argentina-Brazil-Uruguay region. In 1811, Jose Gervasio Artigas--who became Uruguay's national hero--launched a revolt against Spain which resulted in the formation of a regional federation with Argentina. In 1821, Uruguay was annexed to Brazil by Portugal, but Uruguayan patriots declared independence from Brazil in 1825. With the support of Argentine troops and after three years of fighting, they defeated Brazilian forces.
The 1828 Treaty of Montevideo brought Uruguay independence, and the nation's first constitution was adopted in 1830. The remainder of the 19th century under a series of elected and appointed presidents saw interventions by, and conflicts with, neighboring states, political and economic fluctuations, and large inflows of immigrants, mostly from Europe.
Jose Batlle y Ordoñez, president from 1903 to 1907 and again from 1911 to 1915, set the pattern for Uruguay's modern political development. He established widespread political, social, and economic reforms, such as a welfare program, government participation in many facets of the economy, and a plural executive. Some of these reforms were continued by his successors.
By 1966, economic, political, and social difficulties led to constitutional amendments, and a new constitution was adopted in 1967. In 1973, amid increasing economic and political turmoil, the armed forces closed the Congress and established a civilian-military regime. A new constitution drafted by the military was rejected in a November 1980 plebiscite. Following the plebiscite, the armed forces announced a plan for return to civilian rule. National elections were held in 1984; Colorado Party leader Julio Maria Sanguinetti won the presidency and took office in 1985.
The Sanguinetti Administration implemented economic reforms and consolidated democratization following the country's years under military rule. Sanguinetti's economic reforms, focusing on the attraction of foreign trade and capital, achieved some success and stabilized the economy. In order to promote national reconciliation and facilitate the return of democratic civilian rule, Sanguinetti secured popular approval of a controversial plebiscite which granted general amnesty for military leaders accused of committing human rights violations under the military regime, and sped the release of former guerrillas.
The National Party's Luis Alberto Lacalle de Herrera won the 1989 presidential election. President Lacalle executed major economic structural reforms and pursued further liberalization of trade regimes, including Uruguay's inclusion in the Southern Cone Common Market (MERCOSUR) in 1991. However, economic adjustment and privatization efforts provoked political opposition. Thus, while the country achieved economic growth under the Lacalle Administration, social problems and austerity measures combined to foster increasing popular discontent and further political polarization by 1992. The result was the overturn of some reforms by referendum. In the November 1994 presidential and legislative elections, Colorado Party candidate and former President Sanguinetti won a new term of office which he began on March 1, 1995. President Sanguinetti has used his second term to consolidate Uruguay's economic reforms and integration into MERCOSUR, increasing economic growth and reducing inflation.