In 1524, Conquistador 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. Settled as a colony of Spain in the 1520s, Nicaragua became a part of the Mexican Empire and then gained its independence as a part of the United Provinces of Central America in 1821 and as an independent republic in its own right in 1838. The Mosquito coast based on Bluefields on the Atlantic was claimed by Great Britain as a protectorate from 1655 to 1850; this was delegated to Honduras in 1859 and transfered to Nicaragua in 1860, though remained autonomous until 1894.
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, a United States adventurer named William Walker (later executed in Honduras) was elected to the presidency in 1856. Honduras, and other Central American countries united to drive him out of Nicaragua 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 longstanding 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; on November 18, 1909 American warships were sent to the area after 500 revolutionaries (including two Americans) were executed by order of Zelaya. Zelaya resigned later that year.
Continued instability arising from the rivalry of the local Liberal and Conservative parties led to two successive U.S. occupations (in 1912-25 and 1926-33, with a 9-month gap in between).
From 1927 until 1933, liberal Gen. Augusto C. Sandino led a sustained guerilla war first against the Conservative regime and subsequently against the U.S. Marines, who withdrew upon the establishment of a new Liberal government. Sandino 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 Cmdr. Anastasio Somoza Garcia out-maneuvered his political opponents, including Sandino who was assassinated by National Guard officers in February 1934 in violation of a safe conduct, and took over the presidency in 1936.
Luis Somoza Debayle, who inherited his father's power on the latter's assassination (September 1956), was in turn succeeded on his death following a heart attack (April 1967) by his younger brother Anastasio.
Violent opposition to governmental manipulation and corruption (particularly following the wholesale misapproriation of international relief aid following the December 1972 Managua earthquake) spread to all classes by 1978 and resulted in a short-lived civil war that ended the Somoza dynasty and brought the leftist Sandinista National Liberation Front to power on July 19, 1979 under a provisional junta headed by Daniel Ortega.
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. Alarmed at the FSLN's radicalism, Sandinista friendship with communist Cuba, perceived threats to U.S. economic interests, and a growing guerrilla movement in nearby El Salvador (which it accused the Sandinistas of supplying with arms) the United States under the Reagan administration supplied arms and training to the anti-Sandinista Contra forces established in neighbouring Honduras by elements of the former National Guard, as well as allied groups based to the south in Costa Rica.
U.S. pressure also took the form of attacks on Nicaraguan ports and oil installations (September 1983-March 1984) and the laying of magnetic mines outside Nicaraguan harbours (early 1984), actions condemned as illegal (June 27, 1986) by the International Court of Justice. On May 1, 1985 the U.S. imposed a complete economic embargo, which remained in force until March 1990.
Due to the murder of the young American engineer Ben Linder in 1987 by the Contras and the growing distaste in the US for the dirty war in Nicaragua, the US Congress finally prohibited further direct aid to the Contras, but Administration officials attempted to supply them out of the proceeds of arms sales to Iran, triggering the Iran-Contra Affair of 1986-87. Mutual exhaustion, Contra splits and mediation by other regional governments led to the Sapoa ceasefire between Sandinistas and Contras (March 23, 1988) and subsequent agreements (February, August 1989) for Contra re-integration into Nicaraguan society preparatory to general elections.
Victorious in the national election of 4 November 1984 -- validated as "free and fair" by international observers but rejected by the US -- the FSLN lost to successive opposing alliances on February 25, 1990 and again on October 20, 1996 and November 4, 2001, partly reflecting the electorate's exhaustion with the hardships of the economic embargo and fear of renewed Contra activity as well as disenchantment with the FSLN's achievements.
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 7 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 Cmdr. Gen. Humberto Ortega was replaced, in accordance with a new military code enacted in 1994 by Gen. Joaquin Cuadra, who 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 also were judged free and fair by international observers and by the groundbreaking 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, which later consolidated into the Liberal Constitutionalist Party (PLC). Aleman made progress in liberalizing the economy and fulfilling his campaign promise of "works not words" by completing infrastructure projects such as highways, bridges, and wells (thanks in large part to foreign assistance received after Hurricane Mitch hit Nicaragua in October 1998). His administration was, however, tainted by charges of corruption that resulted in the resignation of several key officials in mid-2000.
In November 2000, Nicaragua held municipal elections. Aleman's PLC won a majority of the overall mayoral races, but the FSLN fared considerably better in larger urban areas, winning a significant number of departmental capitals, including Managua.
Presidential and legislative elections were held on November 4, 2001--the country's fourth free and fair elections since 1990. Enrique Bolaños of the PLC was elected to the Nicaraguan presidency, defeating the FSLN candidate Daniel Ortega, by 14 percentage points. The elections were characterized by international observers as free, fair and peaceful.
President Bolaños was inaugurated on January 10, 2002. During the campaign Bolaños promised to reinvigorate the economy, create jobs, fight corruption and support the war against terrorism.
The country has partly rebuilt its economy during the 1990s, but was hard hit by Hurricane Mitch at the end of October 1998, exactly a decade after the similarly destructive Hurricane Joan.