The arguments between Bhutan and British India escalated through the early 1800s as the two fought over boundaries and the British made regular attempts to take legal control over the country, but Bhutan always resisted. This peaked in 1862 when Britain was distracted by Indian uprisings so Bhutan invaded Sikkim and Cooch Behar (in modern day India). This was followed by civil war in Bhutan, which resulted in the country's split and Britain again making a push into the country, an act that was rejected by both governments, leading to war in 1864, which resulted in more lost land to the British.
Although struggles and arguments with the British continued through the 1800s, in 1904 the Bhutanese assisted the British convey sent to Lhasa, Tibet (for some time now, an ally to Bhutan) in order to gain favor. This mission was successful in British terms and hence relations between the Bhutanese and Brits had all but ended. This also led to the rise in power of Ugyen Wangchuck, who led the British assistance and hence grew in popularity in Bhutan. Due to this, the fifty-fourth Druk Desi (the reincarnation of Ngawang Namgyal) resigned and a monarchy had begun. In 1907 Ugyen Wangchuck became the first "dragon king" with British support.
However, British interests in Tibet scared China so the Chinese invaded Tibet in 1910 and claimed Bhutan as well. This led to the British assisting Bhutan in foreign affairs, but allowing the country full rights over domestic issues. But this didn't mean British attributes were voluntarily introduced as the country brought in British-styled education, communication, infrastructure, technology, and more.
These positive relations between the British and Bhutanese continued until 1947 when India gained independence from Britain. In some ways, India then gained control as Bhutan's protector, however India didn't truly get involved in Bhutan's politics and by 1949 this relationship continued as Bhutan transferred control over its foreign affairs to India, but at the same time gaining full independence as recognized by both India and the United Kingdom.
In 1951, China again took over Tibet, this time permanently, leading Bhutan to shut its northern border and forge stronger relations with India. Since 1907 the country had been quickly modernizing, but this invasion led to more rapid changes in order to prevent an internal uprising seeking Chinese communist control.
The 1960s though began a time of instability and chaos in the country as numerous people sought power in the country as others fought the numerous changes introduced by the government, most notably in the form of a more centralized government. The kings held power through this tenuous time, at times coming at the expense of the king's personal power. It also led to the opening of Bhutan, as in 1966 they gained control over their foreign relations and in 1971 joined the United Nations.
Since the 1970s modernization has continued, although some internal disputes and power struggles have also remained. The technological additions have been slow though and television wasn't brought to the country until 1999 as earlier efforts had been focused on education and infrastructure.
In more recent times the country has moved up and down as far as progress is concerned, most notably on the political scale. Due to Chinese pressure the country forced many Tibetans to flee the country and due to arguments with Nepal some ethnic Nepalese claim unfair treatment while others fled the country. In 2003 the country has been faced with Assam independence seekers, who have made their home in Bhutan to flee the Indian government.
In 2005 the government created a constitution, making the country truly a democracy. Also in recent years the country's hostilities with neighboring peoples has settled and the country seems to be more stable. However, there is a strong desire to maintain the traditional way of life in Bhutan so foreign relations and tourism is strongly restricted.