Uruguay is the second smallest country of Latin America, after Surinam. It was a Portuguese colony from 1680, and it became an independent state in 1828, after a group of nationalists succeeded in liberating the territory from Brazilian control. During the 19th century, the sovereignty of Uruguay was in the balance several times, with military threats from Argentina and Brazil, and economic threats from the United Kingdom.
Military pressure from Brazil led to the creation of two parties, the Blancos and the Colorados, and their mutual opposition led to a civil war that dramatically affected the country during the whole of the 19th century. In the same period, England introduced wool and meat production, initiating the exploitation of one of the country's few abundant resources.
In the early years of the 20th century, president José Batlle y Ordóñez implemented important social reform, which laid the foundation for a period of relative prosperity in the country.
The economic crisis of the 1960s coincided with the spread of corruption in state enterprises. As the situation became worse, the political regime became a dictatorship, and civil war broke out once again, continuing for several years until it was crushed in the early 1970s when the military forces took power. The years of military government, which lasted up until the mid 1980s, were dominated by an oppressive, violent regime, with little interest in favouring the country's economic recovery. In 1984, democratic government returned, and the following years saw some efforts at developing the economy, without succeeding in giving the country any real stability. In 2002, the economic disaster that struck Argentina had grave consequences on the neighbouring countries due to drastic reductions in tourism, which represented one of Uruguay's major economic resources. By means of cost-cutting policies and international loan support, the government has succeeded in keeping the situation under control and steering the country towards economic recovery.