After the the Third World War millions of refugees were displaced from countries all over Asia. Japan invited these refugess in order to aid in reconstruction, while other countries such as China denied them entry.

After reconstruction the refugees were herded into districts, the largest of which was Dejima and denied acess to the same quality of living that the native Japanese were accustumed to. However the cost of civil services toward refugees began to skyrocket and amid rising unemployment and increased taxes most citizens began to complain that they were forced to support the refugees lifestyle while losing jobs to foreigners.

For their part the refugees were tired of being marginalized and requested that Dejima recieve independence. Tensions began to rise on both sides, especially with the emergance of Hideo Kuze who quickly became the leader of the refugees. Everyone was unaware that the situation was being manipulated by Kazundo Gouda who had infected Kuze with file that encouraged people with strong political beliefs to use violent acts in furtherance of their cause. For his part, Kuze wanted the refugees to leave the oppresion of the physical world behind and migrate onto the net.

Kuze attempted to obtain a nuclear bomb, but was given a fake instead. The seller was a dead russian mobster who was being controlled by Gouda. With the sale of the fake plutonium, the refugees were further motivated to fight for their independence while the Japenese GSDA had an excuse to invade Dejima. As part of the plan, Prime Minister Yoko Kayabuki was removed from office for being "too weak". This goverment shake-up was Gouda's goad and he hoped to secure a better position in it.

Gouda made a deal with the American Empire who agreed to bomb Dejima with a nuclear missle. However this was thwarted by the Tachikomas who rammed their satellite into the missle. Gouda attempted to defect to the American Empire but was executed by Motoko Kusanagi.