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The Tamoio people were living on the land surrounding the Baía de Guanabara when Gaspar de Lemos sailed from Portugal for Brazil in May 1501 and entered the huge bay in January 1502. Mistaking the bay for a river, Lemos named it Rio de Janeiro. The French, however, were the first Europeans to settle along the great bay in 1555. After a brief alliance with the Tamoio – who hated the Portuguese for their cruelty – the French were expelled in 1567. The Portuguese victors then drove the Tamoio from the region in another series of bloody battles.

By the 17th century, the Tamoio had been wiped out. Those who weren’t taken into slavery died from disease. Other Indians were ‘pacified’ and taken to live in settlements organized by the Jesuits. The Portuguese had set up a fortified town on the Morro Castelo in 1567 and, by the 17th century, Rio became Brazil’s third-most important settlement (after Salvador da Bahia and Recife-Olinda). African slaves streamed in and the sugar plantations thrived. Even more slaves arrived to work in the gold mines of Minas Gerais during the 18th century.

In 1807 Napoleon’s army marched on Lisbon. Two days before the invasion, 40 ships carrying the Portuguese prince regent (later known as Dom João VI) and his entire court of 15, 000 set sail for Brazil. When the prince regent arrived in Rio, his Brazilian subjects celebrated wildly, dancing in the streets. He immediately took over the rule of Brazil from his viceroy.

Dom João fell in love with Brazil. Even after he became king of Portugal, he remained and declared Rio the capital of the UK of Portugal, Brazil and the Algarve. This made Brazil the only New World colony to ever have a European monarch ruling on its soil.

At the end of the 19th century the city’s population exploded because of European immigration and internal migration (mostly of ex-slaves from the declining coffee and sugar regions). By 1890 Rio boasted more than a million inhabitants, a quarter of them foreign-born, and the city spread rapidly.

The early 1920s to the late 1950s were Rio’s golden age. With the inauguration of the grand hotels (the Glória in 1922 and the Copacabana Palace in 1924), Rio became a romantic, exotic destination for Hollywood celebrities and international high society who came to play and gamble at the casinos and dance or perform in the nightclubs.

Rio continued to change. Three large landfill projects were undertaken to ease the strain on a city restricted by its beautiful surroundings. The first was to become Aeroporto Santos Dumont, near Centro. The second resulted in Flamengo Park, and the third expanded the strand at Copacabana.

Rio remained the political capital of Brazil until 1960, when the government moved to Brasília. During the 1960s, modern skyscrapers rose in the city, and some of Rio’s most beautiful buildings were lost. During the same period, the favelas (shantytowns) of Rio grew to critical mass with immigrants from poverty-stricken areas of the Northeast and the interior, swelling the number of Rio’s urban poor. The Cidade Maravilhosa began to lose its gloss as crime and violence increased.

The final decade of the military dictatorship that ruled Brazil from 1964 to 1985 was not kind to Rio. There were numerous protests during that period (notably in 1968 when some 100, 000 marched upon the Palácio Tiradentes). Even Rio’s politicians opposed the military regime, which responded by withholding vital federal funding. The administration was forced to tighten its belt, and infrastructure deteriorated as the city’s coffers dried up.

A turning point for Rio came when it was chosen as host city for Eco 92, the UN Conference on Environment and Development. In the build-up to the conference, the federal government poured in almost US$1 billion to improve Rio’s infrastructure. Approximately US$18 million was spent on satellite communications alone, and Riocentro, a huge convention center, was built.

Today Rio’s coffers are full, and the city buzzes with an unstoppable creative energy, as long-awaited projects are finally being financed. The biggest is the Favela-Bairro project, which strives to integrate favelas into the rest of the city by providing basic sanitation and by planning leisure areas, health clinics, schools, preschools and community centers (Rio has pledged a total of US$1 billion over the life of the project). At the same time, some of Rio’s aging colonial gems are slowly being revitalized as new businesses arrive.

Rio’s most recent makeover took place in preparation for the 2007 Pan Am games, bringing thousands of visitors to the city.

Ongoing efforts of the Favela-Bairro project continue to be a major focus of development. This project, begun in 1994, has brought infrastructure and city services to numerous favelas.