Aerugo

Aerugo is a nation that borders Amestris to the south and continually engages in territorial skirmishes between the two countries. Notably, Aerugo involved itself in the Ishval Civil War by providing Ishvalan soldiers with small arms whose model numbers had been effaced. But when Ishvalan refugees implored Aerugo to grant them sanctuary from the massacre, the Aerugonian government balked at assisting them and disavowed all knowledge of smuggling in weapons. It is currently involved in a war with Amestris. Aerugo is apparently run by a monarchial government, as it has a royal family.

According to the video game "Prince of the Dawn", certain citizens of Aerugo (namely, Prince Claudio) push for a peace treaty with Amestris due to the inordinate amount of bloodshed on both sides of the border conflict, but it is unlikely that such peace talks will succeed so long as Führer Bradley and the Homunculi remain in power. Aerugo is a much smaller country compared to Amestris but is able to retain control over the Aerugo border war. Aerugo is known as more of a trade country in general and does spend little if none of its time on war. Amestris is one of the first real threats to Aerugo's massive economy. The country used to have peaceful dealings with Amestris until Führer King Bradley and the Homunculi came to power (or expanded power). Aerugo has spent a large amount of money, troops, and machines on fighting Amestris and has greatly damaged South Amestris but cannot defeat Amestris because of its powerful military might. Presumably due to the dethroning of Fuhrer Bradley and the Homunculi relations between the two countries are more diplomatic and peaceful

Aerugo's real life equivalant is most likely Italy, which is to the south of Germany/Austria, and was, at the time the story takes place, a Monarchy, being the Kingdom of Italy. This is further evidenced by the similar military uniforms of Aerugonians and Italians, the similar apperance of Military Weaponry, and even the citizens of Aerugo themselves, having dark hair and large noses, a noted trait of Italian people. Styles are also similar, including sideburns and facial hair.