Fantastic War

The Spanish–Portuguese War between 1762 and 1763 was fought as part of the Seven Years' War. Because no major battles were fought, even though there were numerous movements of troops, the war is known in the Portuguese history as the Fantastic War (Portuguese and Spanish: Guerra Fantástica).

Background
When the Seven Years' War between France and Great Britain started in 1756, Spain and Portugal remained neutral. Their differences in South America had been settled by the Treaty of Madrid (1750). King Ferdinand VI of Spain's prime minister Ricardo Wall opposed the French party who wanted to enter the war on the side of France.

Everything changed when Ferdinand VI died in 1759 and was succeeded by his younger brother Charles III of Spain. Charles was more ambitious than his melancholic brother. One of the main objects of Charles's policy was the survival of Spain as a colonial power and, therefore, as a power to be reckoned with in Europe.

By 1761 France looked like losing the war against Great Britain. Furthermore, Spain suffered from attacks by English privateers in Spanish waters, and claimed compensation. Fearing that a British victory over France in the Seven Years' War would upset the balance of colonial power, he signed the Family Compact with France (both countries were ruled by branches of the Bourbon family) in August 1761. This brought war with Great Britain in January 1762.

Portugal had been struck by the disastrous 1755 Lisbon earthquake. The Prime Minister Sebastião José de Carvalho e Melo, Marquis of Pombal directed all efforts towards the reconstruction of the country, and neglected the armed forces, for which he had little interest anyhow.

By the Treaty of El Pardo (1761) between Spain and Portugal all aspects of the Treaty of Madrid were null and void.

War
Spain agreed with France to attack Portugal which remained neutral, but which was an important economical ally of Great Britain. France hoped that this new front would draw away British forces, now directed against France. On 9 May Spain invaded Portugal, and also decided to attack Portugal in South America, and in particular to take the long disputed Colonia del Sacramento.

Peninsular action
During the war, a Franco‑Spanish army, of about 40,000 men, invaded Portugal in 1762 through the border of Trás-os-Montes, conquering Miranda, Bragança and Chaves. These Spanish successes against poorly defended fortresses caused the Portuguese government to ask for help to their ally, Great Britain. Great Britain sent a force of 8,000 men to Portugal under John Burgoyne. An Anglo-Portuguese army, composed of 18,000 men, formed under the command of Wilhelm, Count of Schaumburg-Lippe was able to repel the invasion.

South American theater
In South America the Spanish Cevallos expedition was more successful, capturing Portuguese settlements in present-day Uruguay, including Colonia del Sacramento.

End of the war
In the Treaty of Paris (1763) the status-quo between Spain and Portugal of before the war was restored. Colonia del Sacramento was returned to Portugal, but Santa Tecla, San Miguel, Santa Teresa and Rio Grande de São Pedro remained in Spanish hands, much to the frustration of the Portuguese.