Skyrim is a sovereign province of the Third Empire of Tamriel, ruled in name by Emperor Titus Mede II from the Imperial City and administered locally by the Imperial Legion from Castle Dour in Solitude, but the power lies with the noble Imperial Houses that have established themselves in Skyrim and also operate the East Empire Company. These Houses carry the real orders and intentions from the Elder Council in the Imperial City. Imperial law applies throughout the province. Imperial currency, the gold septim, is the medium of exchange. Imperial confirmation is required for major political appointments. The Imperial cult is the established religion, with the Talos exception under the Concordat. Talos worship is outlawed throughout the Empire and Thalmor Justiciars are beginning to enforce the Talos prohibition with Imperial legal cover.
The Empire stands intact but reduced. The Great War ended in 4E 175 with the White-Gold Concordat, and 25 years later the Concordat's terms still bleed the treasury and humiliate the institutions. Hammerfell seceded; the Empire could not stop it. Morrowind, devastated by the Red Year, is no longer a functional province. The Aldmeri Dominion watches from the south. In Skyrim the Empire may hold sovereignty but operates at a fraction of its full strength. The Legion commands perhaps a dozen active cohorts of soldiers across Castle Dour and scattered forts. Thalmor Justiciars patrol the roads enforcing the Talos prohibition. The Penitus Oculatus operates clandestinely. The Empire would win a maximum-effort war against the Stormcloak rebellion, but it cannot afford the cost while the Aldmeri Dominion waits at Cyrodiil's southern border for the second Great War.
The Thalmor of the Aldmeri Dominion operate in Skyrim, continuing steadily towards their primordial goals: complete supremacy and purification of the province of Tamriel, a return to their pre-eminence amongst men and Divines. Hammerfell successfully resisted their rule after the province was ceded by the Empire; their wars and invasions are currently thwarted with all sides claiming victory. The Thalmor return to their tried-and-true methodologies of sorcery and intrigue. Thalmor patrols travel the roads of Skyrim, conduct searches, make arrests, and conduct interrogations at Northwatch Keep and the Thalmor Embassy outside Solitude. Their presence is a humiliation of the authority of the Empire, of the resolve of the Nordic clans, and serves to create a powerful recruiting tool for the Stormcloak rebellion.
Ulfric Stormcloak is the symbolic face of the rebellion and currently rots in Imperial custody, captured in a skirmish that the Imperials have publicly claimed and privately regretted. The civil war that was on the horizon is now in stasis; Stormcloak forces operate in the eastern holds without their leader, the Empire prepares for a public execution of a rebel claimant, and the Moot has not been called despite Torygg's death. The Imperials have weak claims over rulership of Skyrim via the remnants of Torygg's house who sit on Solitude's throne only as regents. While the elites play power politics, the situation bubbles and cooks everyone caught in its cauldron. The average citizen of Skyrim is indirectly suffering the most from every swing of a sword or stroke of a pen in the early stages of what could be another, or maybe even the last civil war amongst the provinces of the Third Empire.
