- "After all, the Republic is really to blame for all of our Galaxy's struggles. A Confederacy of Independent Systems is in the making—and a great galactic war is inevitable."
- ―San Hill
For decades, numerous planets, species, and groups had been trying to reduce the power of the Galactic Senate, lower or eliminate taxes, grant graft in exchange for political favors, or withdraw from the Republic for various isolationist or xenophobic reasons. Spurred by the disillusioned Count Dooku and the failure of the Senate to even vote on the Financial Reform Act, the various corporations and planets began to withdraw from the Senate in 24 BBY, organizing themselves into a loose separatist movement which allowed laissez-faire capitalism and no government involvement in planetary affairs.
The crisis allowed Supreme Chancellor Palpatine, who was due to step down that year, to remain in office until the threat was resolved. Amidst much debate, he agreed to allow discussion of a Military Creation Act. The period of the Separatist Crisis saw thousands of additional planets continue to leave the Republic; others such as Corellia, while not attempting to secede, declared themselves neutral in the conflict and withdrew their representation from the Senate.
Dooku's confederacy secretly used the negotiation period to begin building droid armies, in the hope that by the time negotiations invariably failed, they would be strong enough to force the Republic to grant them independence anyway. The arrival of a Republic army, contrary to these expectations, sparked the Clone Wars.
A major turning point in the crisis was the Battle of Antar 4, which occurred in 22.5 BBY. The botched Republic attempt to remove a radical, Separatist-affiliated terrorist government from Antar 4 not only resulted in converting the majority of Antar 4's citizens' sympathies to the Separatists, but also showed Separatist-leaning worlds that the Republic was not as infallible as had been thought. In the eighteen months prior to the Battle of Antar 4, over a thousand worlds had joined the Confederacy; in the three months following the battle, over five thousand new worlds joined.
Another notable point in the Separatist Crisis was the Ansion border dispute, in which the Commerce Guild tried to get the people of Ansion to withdraw from the Republic, which would have meant other more important planets would withdraw due to Ansion's numerous treaties with neighboring planets.
The Jedi Council sent four Jedi (Luminara Unduli, Obi-Wan Kenobi, Anakin Skywalker and Barriss Offee) to try and keep Ansion within the Republic. In the end they managed to call a truce between the pro-Secession Unity Council and the nomad Alwari, the dispute between the Unity Council and the Alwari tribes was being used by the Commerce Guild and the Ansionion Senator Mousul to convince the Ansionions they would be benefit more from being out of the Republic.
However, after the Jedi managed to form a truce between the two sides the Ansionions decided they did not need to leave the Republic after all and overwhelmingly voted against secession.
The failure of Ansion meant that the Separatists were delayed from issuing demands to the Republic, but Dooku only considered Ansion to be a minor setback.
The Separatist Crisis ended when the Battle of Geonosis began.
Although the Republic provided some measure of unity, and promoted a norm of negotiation, it lacked a military force capable of maintaining order. Security was the province of individual planets, or powerful interplanetary blocs like the Trade Federation. Thus, there was a kind of latent anarchy beneath the civilized surface. The planets that would later constitute the Confederacy of Independent Systems brought this deficit into plain sight by departing from the Republic.
Although it is not entirely clear, there might have been reasons for both weak and strong planets to follow this course of action. Strong planets obviously would fare well under a more decentralized regime, because they could exercise their power openly. But while the Republic's influence may have been enough to thus irritate the great powers, it was not enough to convince the weaker powers that it could truly protect them, as the Naboo crisis demonstrated. Perhaps smaller-scale alliances would provide better protection than a commitment to a galactic government.
- "There will come a time when that cult of greed, called the Republic, will lose all pretext of democracy and freedom."
Advocates of decentralization also found support amongst the free-trade lobby. A galactic government could either impose its own taxes, adding to trade barriers put in place by planets, or favor a liberal trade regime, compelling planets to lower those barriers. The Republic tended towards the former model, in part perhaps because it lacked the power to pursue the latter. It thus became much resented by business and trade actors. The CIS offered an alternative of liberalizing but otherwise minimalist governance that these actors found attractive.
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