The source of the conflict with Oniga stems from Oniga's revolution era; it is believed that the ruler of that age, Tennou Myoga, was assassinated by magic. Believing it to be a military action by Karaten, many mages in Oniga were either killed or forced to flee the country. While Karaten denied any involvement, Oniga was untrusting, and this bloodshed lead to a very tense relationship between the two. A peaceful resolution ended with Karaten maintaining a small outpost in Oniga, under agreement that they maintain no guilds or operations. This also lead to the ban on arcana within the city walls in Oniga.
Karaten is also responsible for the integration of Mechanations into society, with the first ones making appearances after the dust in the Onigan conflict settled roughly 10 years ago, showing their use to society as they aided in the reconstruction of Sigrogana's damaged villages and towns. Anyone wishing to create their own Mechanation must first be licensed by Karaten officials for mainly one reason; to enter the mystical forest known as the Mechana Forest.
Karaten is separated into several sectors; the public sector, where people arrive, with merchants and such. The mage sector, where mages approved by the city may receive special housing and services. And finally, the private sector, where the most loyal in Karaten dwell, as well as the military force. Karaten's government operates on a council basis, which is what they find most fair. This kind of government is similar to an oligarchical government.
High Mages in Karaten hold some measure of political power. While they can't decide things on their own, or anything, their opinions on matters is as important as the contributions they've made to Karaten; which is to say, if you've accomplished something significant, they'll care what you have to say. If not, they probably don't care about your personal opinion.
Karaten is famous for being the most technologically advanced country in the entire world. Their technological endeavors have even expanded to the point of crafting artificial humans. Their technology is mostly centered around magic and focus, which makes sense since they are the magical capital of the world.