Pre-colonial Nicaragua was occupied by two distinct ethnic groups. The central and western regions were populated by tribes related to the Aztecs and Maya, who had migrated southwards from Mexico. In the opposite direction, probably from Colombia, came a different group, who occupied the Caribbean lowlands. The arrival of Spanish colonists in the early 1500s brought the demise of most of the western and central populations through imported disease and forced labour. The eastern peoples survived due to a relative lack of interest from Spain and, later on, support from the British, who were challenging Spanish influence in the Caribbean.
Under Spanish rule, Nicaragua was incorporated in the Captaincy-General an administrative region, also known by the Spanish term audiencia of Guatemala. At its peak in the mid-16th century, this stretched across the whole of central America, from southern Mexico to Panama. Throughout the colonial era, two major struggles dominated the political economy of Nicaragua and indeed the whole region. The first was between the Spanish and rival imperial powers mainly the British, French and Dutch, who made repeated incursions into Spanish-controlled territory. The second was the internal feud over trade policy. On one side were wealthy landowners descendants of the original Spanish colonists, backed by the moral authority of the Catholic Church who supported and relied upon trade monopolies in the mining and agricultural commodities which were the mainstay of the regional economy. In the opposing camp were anti-clerical 'liberals' who promoted a free trade system.
The trade argument was a reflection of that raging within Europe; it was ultimately the events in Europe that brought about the end of colonial rule and national independence for Nicaragua. The catalyst was the French invasion of Spain in 1794, which triggered internal upheaval in the Captaincy-General and drastically weakened Spanish power. As one of the poorer colonial possessions, Nicaragua was low on the list of Spanish priorities and little serious effort was made to hang on to it. In 1821, the Captaincy-General of Guatemala declared independence. Some efforts from Mexico were made to bring Nicaragua to heel but in 1823, the five provinces now the modern states of Nicaragua, El Salvador, Panama, Costa Rica and Honduras declared full independence as the United Provinces of Central America. Internal feuding led to the rapid dissolution of the United Provinces and in 1838, Nicaragua declared itself a sovereign state with a democratic system of government.
The fledgling nation was slow to stabilise and immediately became prey to what were now the most powerful foreign influences in the region the British and the Americans. The British consolidated their control over the Caribbean seaboard, the so-called Mosquito Coast the name derives from the term 'miskito' or mixed-blood, as most inhabitants of the area were descended from inter-marriage between Caribbean Indians and black former slaves. The Americans first appeared in the form of the freebooting William Walker. In 1855, one of the 'liberal' factions disputing power in Nicaragua invited the American mercenary to come and aid their cause. Walker took effective control of the government by taking over the national army. However, he was no liberal and planned to remodel Nicaragua as a slave colony annexed to the US. Walker was eventually defeated after a bitter struggle. After several unsuccessful attempts to re-invade Nicaragua, Walker was captured by the British, handed over to the Nicaraguan government and executed in 1865.
From this point on, the struggle between supporters and opponents of the US along with the propensity of Washington to intervene when it felt its interests threatened came to dominate the political landscape of Nicaragua. In 1912, after 50-odd years of relative quiet, it was the conservatives who called upon US intervention to resolve serious domestic upheaval. This revolved around a number of issues, including the failure of Nicaragua to secure the construction of an Atlantic-Pacific canal, which was built in Panama instead, as well as the historic conflict between conservatives and liberals. The Americans maintained a constant military presence in Nicaragua for the next two decades. For the first 14 years, it was nominal, however, in 1926, worried about a possible radical election victory similar to what had occurred in Mexico, US marines arrived in force. Most Nicaraguan politicians acquiesced to American will. However, a radical group, led by Augusto César Sandino who gave his name to the Sandinista movement launched an effective guerrilla campaign that forced the Americans' departure in 1933.
Sandino's guerrillas had agreed to stop fighting when the Americans left. This they did. However, a new power had arisen during the course of the campaign, in the form of the paramilitary National Guard, led by General Anastasio Somoza Garcia. Against the wishes of the government, Sandino and his senior commanders were arrested by Somoza and executed in February 1934. Two years later, Somoza a wily and vicious politician was elected president and duly established a military dictatorship. Characterised by brutality, despotism and systematic corruption, this lasted for almost half a century. Somoza was assassinated in 1956, at which point his son, Luis Somoza Delbaye, took over. At the turn of the 1960s, a rebel movement called the Frente Sandinista de Liberación Nacional (FSLN) began a guerrilla campaign, which finally overthrew the Somozas after 17 years, in 1979.
The 'Sandinistas' established a Junta of National Reconstruction and began a programme of agrarian reform, nationalisation of industry and massive health and literacy schemes. However, in 1981, following the election of Ronald Reagan as US President, the Americans under the banner of fighting communism began a programme of destabilisation in Nicaragua, helping the 'Contra' guerrilla forces in Honduras and Costa Rica and mounting an economic boycott. The Contra war caused serious difficulties for the FSLN government. Repeated attempts to negotiate a settlement foundered upon the opposition of the USA, which was determined to bring down the Sandinistas. Finally, in 1989, a deal was agreed with Honduras where most of the Contra bases were located to end the insurgency. Elections in February 1990 showed how much Sandinista popularity suffered during the years of turmoil and austerity. Violeta Chamorro, widow of the publisher, Pedro Chamorro who was killed by the Somoza regime defeated Sandinista leader Daniel Ortega when she stood on behalf of the combined opposition UNO Alliance representing 14 of the 21 opposition parties in Nicaragua.
Once in government, much of Chamorro's energy was consumed by holding together the fractious UNO coalition. The President herself had little to do with the day-to-day business of government, which was mostly in the hands of her son-in-law, Antonio Lacayo Oyanguren. The new government found it difficult to handle the most pressing domestic issue: land reform. Neglect of claims of ownership, some of which dated back to the Somoza era, provoked a series of armed uprisings by disaffected soldiers from both Contras and Sandinistas. However, new legislation passed in 1998 put an effective end to the matter.
The disintegration of the artificially-created UNO coalition in the mid-1990s was to be expected. More of a surprise was the split in the traditionally disciplined Sandinistas. In the summer of 1995, a moderate faction led by ex-Vice-President Sergio Ramirez broke away. Despite a further decline in his fortunes, including a sex scandal involving alleged abuse of his stepdaughter, Ortega survived as leader of the rump Sandinista party and has stood, unsuccessfully, at both the 1996 and 2001 presidential elections.
In 1996, Ortega was defeated by Arnoldo Aleman Lacayo leading an alliance of liberal and centrist parties, and then in the most recent poll in 2001 by Aleman's vice-president, Enrique Bolanos Geyer. By this time, the Sandinistas had restyled themselves as Convergencia and adopted a Blairite Christian Democrat programme. The Bolanos government which took office in 2001 has a tiny majority in the national assembly, and its work was initially hamstrung by a dispute over the fate of his predecessor, Arnoldo Aleman. The former president had been arraigned for corruption during his term of office, but was protected by his parliamentary immunity. His immunity was eventually removed in September 2002. 14 months later, Aleman was convicted and sentenced to 20 years imprisonment. The government received some welcome good news at the start of 2004 however, when, following protracted negotiations, the World Bank agreed to write off 80 per cent of the country's debt to the institution a sum of around $3 billion.