As 3260 drew to a close, the Federation and Empire were once again rattling their respective sabres, with the AIS looking on, largely disinterested. The two powers had been involved in a cold war that waxed and waned with such frequency that it was beginning to get boring, and was anyway just the normal run of events. However, this time, it was beginning to look ugly with border skirmishes along systems between the two powers. Usually the Federation and Empire would just posture, and shots would never be fired, but now ships were getting destroyed. This state of affairs continued for another three months. The AIS wasn't really concerned at this point nevertheless since the drama was happening many light years away, and the economy had never done better. Alioth was now rivalling the Sol system in terms of wealth, with the New Rossyth shipyard producing some of the best designs yet seen.

However, this feeling of security was suddenly obliterated when on the 26th March, 3261, a large Imperial invasion fleet suddenly hyperspaced into the Veliaze system.

Veliaze was at the time, a system in a state of anarchy. No one power ruled the system, pirates abounded, and so did the bounty hunters looking for a prize. It wasn't the sort of system the Empire normally gets involved with. However, the large bounty hunter network that existed in Veliaze system space quickly noticed the invasion force. Veliaze may have been a seething pit, but it was their seething pit (not to mention source of income and Elite ratings). The hunters made a heroic attempt at repelling the force, but the three Imperial battlecruisers, behemoths with a mass in excess of half a million tonnes, with their supporting fighter escort quickly destroyed all resistance. The cruisers landed their invasion force and took control of the entire system. The whole event lasted less than a standard week - basically the time from entering the hyperspace port to the arrival at each inhabited station and planet in the system.

Veliaze is very close to Gateway, a major system of the AIS. The sudden takeover of Veliaze by the Empire sent waves of panic throughout the entire AIS when the telemetry was analyzed from one of the bounty hunters who escaped. The data showed that none of the ships in any system militia could even scratch the invasion force, now stationed only a few light years away. Although the Imperial force was not big enough to take on the entire AIS, now that they had Veliaze, they could easily and quickly take single AIS member systems with impunity. Their current force could easily take Gateway, a key trade system of the Alliance. With Veliaze, the Empire now had a muster point from which to stage a full scale invasion of the Alliance. Alliance leaders agreed that this is what they were probably doing, despite strenuous assurances from the Empire that this was not so. Elisha Young, the President of the Gateway system declared an emergency and put the entire system militia on high alert. The Alliance also asked for Federal assistance should the Empire decide to attack. However, the Federation leadership was not particularly reassuring to the AIS since the Federation believed that the invasion of Veliaze was not to stage an invasion of the AIS, but to provide a two-pronged invasion of Federation space. The Federation, shocked by the audacity of an outright invasion of an independent system, were now also in a state of panic. They didn't know whether to attack Veliaze and remove the Empire from this strategic position and risk all-out war, or to try and bring the Empire to the negotiating table and try to find a diplomatic solution. Time was rapidly running out, and the largely incompetent Federation leadership could do nothing but flail around like a wet fish on a hook.

The Alliance realized that they were the only people who could save themselves. The Federation were clearly going to be no help in the immediate future, and although Alliance leaders largely expected the Federation to join the fight if an Imperial onslaught began, by this time it would be too late and much of what the Alliance had worked for would be destroyed. To this end, all civilian production ceased at New Rossyth shipyards, and the emergency refitting of long range cruisers as capital battleships began. Many cruisers were owned by the governments of Alliance members, and they were rapidly ferried to New Rossyth. Within ten days of the takeover of Veliaze, the cruisers that were already in the Alioth system were outfitted as formidable battleships, packing a dozen turretted large plasma accelerators each plus fifteen bridged Class 4 hyperdrive systems. Virtually all the equipment available at the various shipyards of the Alliance ended up on these vast leviathans, and fifteen days after the start of the crisis, three cruisers were deployed in the Gateway system, thought to be most at risk. Each ship was assigned a flight of 150 fighters from the Gateway militia. A hastily arranged Alliance military command structure was put in place, lead by Gateway's militia leader, General Rafe Wilson. In all, twenty five battlecruisers were outfitted at a cost to the Alliance of ninteen billion credits each, and the almost cessation of all trade throughout the Alioth and Gateway systems for a period of three weeks.

The Alliance now realised that it had options. With no more Imperial craft emerging in Veliaze (being watched intently by both the AIS and Federation) the Alliance found that it could decide to simply defend any attack, liberate Veliaze immediately, or liberate Veliaze if it appeared that the Empire was attempting a buildup. Whilst deciding their options, as quickly as the crisis began, it ended. With no warning, the Imperial force departed Veliaze. Anxiously scanning for hyperspace entry clouds, the Alliance found that the fleet must have either departed for home, or was mounting an attack on the Federation. It was soon discovered that the fleet had returned home. The departure was on the 20th April, 3261. The fleet had stayed for less than a month, but had changed the Alliance forever. All that remained at Veliaze was a small caretaker government placed there by the Empire, which was ultimately to join the Alliance in May 3262, much to Hengist Duval's annoyance. It was discovered in 3289 after secret Imperial documents were leaked that the attack had been precipitated by a man named Pierre Chandelle, the notorious mobster "leader" of the Veliaze system. He had personally swindled Duval out of several million credits. Not surprisingly, Chandelle was never seen again after the sudden attack. It's not known why the Empire didn't just send an assasin after Chandelle, but it is widely assumed that the Empire wanted to not only settle the score with him but to also induce panic in the Federation (despite the extreme risk).

And frighten the Federation they did. The political fallout from the affair destroyed the Federal leadership at the time, who were forced out by a vote of no confidence demanded by the Federal Senators of systems that bordered the Veliaze system. During this uncertain time, the Empire made a quick grab for Tililia, a disputed system, notorious for the VLA scandal only ten years earlier. The Federation, otherwise distracted with their own political problems, offered no resistance.

The Alliance now realized that it was high time that they had an organized military, especially after the cost of lost trade plus equipment that went to turn twenty five long-range cruisers into fully fledged capitol ships. On Friday 20th May, 3261, the Alliance Joint Naval Forces, or AJN was formed under the command of Rafe Wilson, the first Admiral of the AJN. The AJN was to command the capitol fleet and its immediate fighter forces. The system militias were to remain intact, but receiving orders from Wilson's fleet should the need for defence of the Alliance ever arise. In honour of the legendary ship designer, Mic Turner, the AJN's main combat training academy was named the Turner Space Combat Academy. Initially it was to be based at Argent Station in Titican, but it was found the facilities at Dublin Citadel in Gateway would be more useful to the Academy. The Academy officially opened on 18th December 3261, its mission being to ensure that AJN combat pilots were the best trained in the Galaxy and that the police forces of Alliance systems would be the most effective in the Galaxy. There were some consequences of the Alliance acquiring a military force. Although the Alliance never has nor will have any ambitions to initiate agression, the presence of the force meant that the Federation and Empire finally officially recognised the Alliance as a legitimate organization.