History: Mexico has an ancient and fascinating history. It begins with the Olmec civilisation in around 1500BC, which reached its height about 1200BC. Olmec (meaning 'people from the rubber country') were an advanced culture in religion, architecture and mathematical systems. The earliest known date was recorded by them in 31BC, according to our present calendars. By AD500, two great cities had emerged, Teotihuacan (with a population of approximately 200,000) and Cholula, a religious centre near Puebla which survived until the Spanish Conquest in 1521.

The height of Mayan civilisation was reached between AD600-900. The Toltecs, whose capital was Tula, were the predominant civilisation of this time. Known for their fine architecture, elegant speech and intellectual pursuits, they were the ancestors of the famous Aztecs who were thriving at the time Columbus arrived in the New World in 1492. In 1519, a Spaniard named Hernan Cortés arrived from Cuba with a crew of 550 sailors and explorers and settled just north of today's city of Veracruz. By this time the Aztec Empire controlled vast territories from the Yucatán peninsula to the Pacific, with over 370 individual nations under their authority. Ruling from their capital city, Tenochtitlan, the Aztecs demanded heavy tribute from their subjects, which may have caused some to side with Cortés in his attack on the Aztecs.

The other factor on Cortés' side was the lucky coincidence that 1519 was the exact year when legend had it that the Aztec god, Quetzalcoatl, had promised his followers he would return - from the east - and so Cortés was mistaken for a god. After two years of fighting and great loss of life on both sides, the Aztecs were defeated under their final ruler, Cuauhtemoc. Under Spanish rule, local culture was suppressed and native traditions were discouraged. Mexico achieved independence after the wars of 1810-21. In 1824 a constitution was adopted and Mexico's first President, Guadalupe Victoria, was inaugurated and both Britain and the USA officially recognised the Republic of Mexico. But stability was short-lived.

In 1847, Mexico was forced to cede half of its territory to the USA. In 1861, Benito Juárez, a Zapotec Indian from the state of Oaxaca, was elected President. Faced with overwhelming debts (mainly owed to France, Spain and Britain), Juárez announced a 2-year moratorium on payment of foreign debts.

The French Emperor Napoleon III sent an army to Veracruz to enforce his claim to payment. A series of civil wars and conflicts with European governments and the USA punctuated the next 30 years. However, Juárez was elected to a third term and is now considered among Mexico's most popular leaders, having come from a humble background and instituting such welcome changes as a total reform of the education system (making primary school attendance free and obligatory) and completing a railroad from Mexico City to Veracruz.

Afterwards, the dictatorship of Porfirio D'az (between 1876 and 1910) brought an autocratic stability to the Republic. Several revolutions and coups followed before the egalitarian 1917 Constitution was introduced which led to the accession of the Partido Revolucionario Institucional (Institutional Revolutionary Party, PRI), which created an effective one-party state within the framework of an elective democracy. The PRI ruled virtually unchallenged until the mid-1970s, by which time opposition parties had managed to build up strong bases of support and occasionally mount one-off electoral challenges, but the reins of power remained firmly in the hands of the PRI. From the 1960s onwards, Mexico developed a largely oil-based economy.

Under the government of Lopez Portillo, who was elected President in 1976, the country was brought to the verge of bankruptcy by the negotiation of enormous foreign loans, totalling US$80 billion, borrowed against future oil revenues to finance a massive programme of economic and social development. Corruption and mismanagement, coupled with a collapse in the oil price during that period, precipitated a major political crisis in 1982.

This was handled by Lopez Portillo's successor, Miguel de la Madrid, who implemented economic reforms and anti-corruption measures, but achieved only limited success in the face of entrenched vested interests. Carlos Salinas de Gortari, who won the next presidential poll in 1988, had more success. This election was significant for the challenge to the PRI by the Frente Democrático Nacional (FDN) led by a disillusioned ex-PRI apparatchik, Cuauhtémoc Cardenas, but it failed to dent the PRI's continuing electoral appeal.

The new government's embarked on a major economic reform programme comprising a package of devaluation, tax reform, privatisation and deregulation. The programme met with widespread opposition, manifested by strikes in the public sector the following year, but it was widely praised in Western capitals and dubbed 'Cactus Thatcherism'. The move towards a liberal trading regime has included Mexico's application to join GATT (the General Agreement on Tariffs and Trade) and the instigation by Saloons of a free-trade treaty with the USA and Canada: this eventually led to the creation of the North American Free Trade Agreement (NIFTIER) which was ratified by the three countries during 1993. The Saloons government also improved its standing in Washington by cracking down on drug trafficking.

Popular as all this was overseas, Mexicans saw little benefit as living standards for most people fell sharply. With political opposition stifled by the PI stranglehold, discontent took on a new form when, on New Year's Day 1994, an armed insurrection began in the southern state of Chips. Land reform was at the heart of the 'Zapatista' programme (named after Mexican revolutionary hero Emiliano Zapata). The Mexican Government waged a classic counter-insurgency war, using a mixture of force and incentives on the impoverished peasant population which clearly has considerable sympathy with the guerrillas.

With a neat line in propaganda, the Zapatista insurgency did much to undermine the image of the government abroad but after its initial burst, it has since been largely engaged in an inconclusive stand-off with the government. Elections in August 1994 brought Ernesto Zedillo Ponce de Leon to power. Within months, Zedillo faced a major economic crisis as the peso collapsed and output declined by 10% in three months.

Although the economy had recovered somewhat when the next electoral contest was held in July 1997, the PRI lost its overall majority for the first time in the Camara, (although it retained control of the Senado). By the time of the latest presidential poll in July 2000, the writing was on the wall for the PRI. The major challenge came, not from Cardenas (standing for a third consecutive time) but from the centre-right Partido Accion Nacional (PAN) whose candidate, Vincente Fox Quesada, stood under the banner of 'Alliance for Change'. In what was considered to be the fairest poll in recent Mexican history, Fox defeated the PRI candidate, Francisco Labastida, by a seven-point margin.

The Alliance for Change also comfortably won the simultaneous parliamentary election. The rule of the PRI which had overtaken the Soviet Communist Party longevity record for a ruling political party, was finally at an end after 71 years. Government: Mexico is a federal republic with 31 states and one federal district. The bicameral National Congress is elected by universal adult suffrage. The 64 members of the Senate (two per state plus two for the federal district) serve for a term of six years. The 500-seat Chamber of Deputies consists of members elected for three years, 300 from single-member constituencies with the remaining 200 allocated to minority parties on the basis of proportional representation. The president, who appoints a cabinet, has executive power and serves a term congruent with that of the Senate. Each state has its own governor and elected Chamber of Deputies.