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Bajor signs a treaty to become a member of the United Federation of Planets.
The Cardassian Union holds negotiations with the three main powers of the former alliance to have systems captured in the war returned to it. While the Federation unreservedly agrees due to the impact the war has had on the Cardassians and the Klingons agree in exchange for technology from the Federation, the Romulans respond negatively.
Starfleet and the Cardassians begin to put a blockade in to place to convince the Romulan's to give up the systems they hold in Cardassian space.
The Romulan Senate orders a task force to the disputed Cardassian systems to break the blockade and defend its assets.
Seeing war over the disputed systems an inevitable, the Romulans launch a surprised cloaked attack into Federation and Klingon space. The Klingons lose over 300 starships in the attack.
The Federation responds to the Romulan attack by issuing a declaration of war on the Romulan Star Empire and launching a counter offensive, capturing several border planets.
The Klingons and Cardassians respond to the situation by entering a state of isolation, too weakened to involve themselves in any further military action.
The Battle of Alpha Eridani takes place with 403 Romulan ships squaring off against 317 Federation starships. Under the command of Rear Admiral Trish Wallace the Starfleet task force is able to inflict heavy losses on the Romulan force leading to a Romulan retreat.
A cease fire is signed at Alpha Eridani marking an end to the war between the Federation and the Romulan Empire. The Neutral Zone is re-established and Starfleet marks Alpha Eridani as a memorial system for the "War of Legitimacy" and all other conflicts where Starfleet officers have given their lives.
The Daystrom Institute publishes a report on the balance of power around the Federation. The major powers, after so much war, are no longer significantly ahead of previously more minor powers. The Tholian Assembly, Gorn Hegemony, Kzinti, Hydran Kingdom, Lyrans, Ferengi Alliance and Orions have all made major steps to becoming significant powers in the region.
The Ferengi Alliance, experiencing a huge economic boom, announces new trade agreements related to the rebuilding efforts across the quadrant. The Ferengi Grand Nagus Rom had been convinced to raise prices of all commodities, leading to incredible short lived gains.
In response to the rising costs of Ferengi trade that all of the major powers were engaging in, the Federation hosts a meeting with all key players in the region to establish the trading alliance. The Interstellar Trade Federation was established with nearly every key power, including the Ferengi, as members.
The Federation and the Romulan Empire agree to allow non military vessels to enter the Neutral Zone.