It is believed that Papua New Guinea was originally inhabited by Asian settlers over 50,000 years ago. The first European contact in 1526-27 was by the Portuguese explorer Jorge de Meneses, who named the island Ilhas dos Papuas (Island of the Fuzzy Hairs). The Spaniard Inigo Ortiz de Retes later called it New Guinea because he thought the people similar to those of Guinea in Africa. Further exploration followed, including landings by Bougainville, Cook, Stanley and John Moresby.
A large, rather daunting place, New Guinea was left alone for several centuries, with only the Dutch making any effort to assert European authority over the island. But in 1824, the Dutch (seeking to shore up their profitable Dutch East Indies empire) formalised their claims to sovereignty over the western portion of the island. Germany followed, taking possession of the northern part of the territory in 1884. A colonial troika was completed three days later when Britain declared a protectorate over the southern region; outright annexation occurred four years later.
n 1906, British New Guinea became Papua, and administration of the region was taken over by newly independent Australia. With the outbreak of WWI, Australian troops promptly secured the German headquarters at Rabaul, subsequently taking control of German New Guinea. In 1920, the League of Nations officially handed it over to Australia as a mandated territory. During WWII the northern islands and most of the northern coast fell to the Japanese who advanced southward until stalled by Allied forces. By 1945 the mainland and Bougainville had been recaptured, but the Japanese were impregnable in New Ireland and especially Rabaul in New Britain, where they dug 500km of tunnels. They surrendered these strongholds at the end of the war. Post-war, the eastern half of New Guinea reverted to Australia and became the Territory of Papua & New Guinea. Indonesia took control of Dutch New Guinea in 1963 (incorporating it into the Indonesian state as Irian Jaya). PNG was granted self-government in 1973, and full independence was achieved in 1975.
Papua New Guinea's most immediate concern after independence was its relations with powerful neighbour Indonesia. After Indonesia's takeover of Irian Jaya, many West Papuans organised a guerrilla resistance movement - Organisasi Papua Merdeka (OPM) - which fought Indonesian forces with limited success. Tensions decreased markedly after 1985, as the flow of refugees (estimated at over 10,000) between Irian Jaya (now called West Papua) and PNG slowed. There are still 7500 West Papuan refugees living in camps in Western Province - the largest expatriate group in the country.
However, a new trouble spot for PNG soon appeared on Bougainville Island, where the locals regard themselves as racially and culturally distinct from mainlanders. Bougainvilleans were embittered by the environmental destruction caused by the giant Australian-owned Panguna copper mine and by the way revenue from the mine filled a third of the national coffers but did not find its way back to their island. They formed the Bougainville Revolutionary Army (BRA) and forced the mine to close in 1989. This act, coupled with rebel demands for secession, sparked a major military confrontation with PNG forces and a resulting slew of human rights abuses.
After much bloodshed - including the notorious St Valentine's Day Massacre of 1990 when gunships, supplied by Australia, were deployed in an offensive role by the PNG security forces - peace talks were tentatively staged. But in 1992, then Prime Minister Wingti launched another major offensive against the rebels, further exacerbating the situation. The conflict claimed the scalp of the next prime minister, Sir Julius Chan, in early 1997 when PNG military leaders refused to co-operate with a US$35 million covert operation that involved South African mercenaries re-taking the island by force. The mercenaries were sent home and Sir Julius resigned. Elections in mid-1997 saw Bill Skate take up the office.
The Bougainville war officially ended in April 1998 - during the course of the 10-year war around 40,000 Bougainville islanders became refugees, and up to 20,000 people were killed. Rising optimism over the ceasefire was rapidly tempered by a corruption scandal fizzing up around Bill Skate, and a catastrophic drought, caused by El Niño and felt worst in the central Highlands provinces. Around 500 deaths were attributed to resulting hunger and disease and more than 650,000 people were severely affected. As if that wasn't enough, in July 1998 three giant tsunamis hit PNG's north-west coast - up to 3000 people were killed as villages along the coast were completely flattened. However, with the Bougainville ceasefire holding, cautious optimism is abroad.
In November 2000, the government announced plans to relocate 1000 inhabitants of Duke of York atoll, which is slowly sinking due to shifting tectonic plates accompanied by volcanic activity. Meanwhile the country continued to teeter on the brink of lawlessness, to the point that, in his third term as prime minister, Sir Michael Somare invited the former colonial masters to intervene in July 2004. Australia agreed to send 300 police and bureaucrats to help fight crime and corruption. However, the Australian police were soon on their way home again when certain terms of their deployment were found to be unconstitutional in a local court challenge. Bougainville's first president was elected in mid-2005.