Before European colonization of the New World, the only inhabitants of modern-day Uruguay were Charrua Indians. When Spanish explorers discovered the territory in 1516, they faced fierce resistance from the Charrua Indians. Because there was also no gold or silver in the region, the area remained largely unsettled during the 16th and 17th centuries. The Spanish brought cattle, which was the dominant source of wealth in the region.
Montevideo was founded by the Spanish in 1726 originally as a military stronghold. Soon, the city developed into a commercial center competing with nearby Buenos Aires, Argentina.
In the 19th century, Uruguay became subject to ongoing conflicts among the British, Spanish and Portuguese for control over the Argentina-Brazil-Uruguay region. Uruguay ultimately declared independence, memorialized in the 1828 Treaty of Montevideo.
The early 20th century was marked by widespread political, social and economic reforms, such as the welfare program and a plural governance. Early independence saw conflict between rivaling political factions — the land-owning Blancos and the urban Colorados. By 1973, armed forces took over the Uruguayan government and established a civilian-military regime. The regime eventually gave up and restored civilian rule in 1984.
Uruguay’s dependence on livestock as its primary export left it vulnerable to plummeting commodity prices in 2002. The recession left many Uruguayans living in poverty and prompted a large migration of young people out of the country. In 2004, a new left-of-center political coalition won national elections, effectively ending 170 years of a two-party system.