Aerugo

Aerugo is a country in the World of Fullmetal Alchemist, located south of the main country of the series, Amestris.

Government
Aerugo is a Principality governed by Prince Claudio. As a princedom, Aerugo is a much smaller country compared to Amestris but is able to retain control over the Aerugo border war. The country is also known as more of a trade country in general and does spend little if none of its time on warfare.

History
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, making Amestris one of the first real threats to Aerugo's massive economy.

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.

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 such peace talks could not succeed so long as Führer Bradley and the Homunculi remained in power. Presumably due to the dethroning of Führer Bradley and the Homunculi relations between the two countries became more diplomatic and peaceful.

Trivia

 * The country's name is derived from aerugo, the old alchemical term for rust.
 * It is possible that Aerugo was based in real life's Italy. They share many similarities that range from government type, citizen appearance, Military Weaponry, history and relations towards their northern neighbours.