Yes what most people said is true, let me summarize.
The whole conflict started when the BAF setup a technology exchange with the Liberty Navy.
Liberty Navy got a few templars/challengers plus Splitters and in return the BAF got Magma Hammers and a few Liberators (I think).
An operation was conducted and the KPT retrieved evidence of Primary LN members using Splitter guns. They forwarded it to the Emperor and the Emperor got all angry at the Libertonians.
This lead to the initial setup of the embargo you see today. However, what made it stay, to this day was primarily due to the LSF attempt of spying in the Kyushu System when the Emperor had a meeting with RM officials.
Now tensions have risen again due to the KPT have managed to gather intel of a possible attempt from the LSF to assist traders who are trying to break the embargo, as well as entering Kusari's side of the Kepler system. It's important to know that Kusari believes they control that area because the adjacent Trade-Lanes and Jumpgate to Shikoku belongs to the Naval Forces. Liberty disagrees and claims the system is independent system-wide. Currently, if Liberty Military/Law enforcement is found within that area, they will be told to leave, if they don't, most likely engagement will occur.
However, recent talks suggests this KPT operation might be short-lived and most likely aborted. We will see.
All in all, I believe these tensions arising and the consequent Role-Play to be very nicely played, with little to no "Player whining". People rolling with it. Corporations taking new stances. Striking new deals. I hope it has given them something more to do.
Rheinland and Bretonia are very cold at the moment. On top of the Bretonians attacking the Kusari with Liberty ships the Rheinlanders were attacked by Libertonians using Bretonian ships.
I believe there is a limited embargo between Rheinland and Bretonia, in the form of war machines.
The catalyst that sparked it was rather small but there seemed to have been plenty of fuel to burn which rapidly turned into the embargo. GMG, not wanting to lose it's largest customer base, had already worked something out in co-operation with other factions to get fuel to Liberty without going through Kusari. There's a distribution contract being defaulted on somewhere in there. GMG has pulled the rug out from under it's distributors in the past. Just requires one more voice in the council to change minds (I'm one of them who is stalling and hoping this ends).
It's all a case of he did this, she did that with all these wars. When everyone's freedom fighting there's never any difference in politics; which in our day and age, is essential for a war to have started in the first place. These wars were started and have been handled like a feudal japan, not a civilised and advanced human race.
But what's done is done, all you can do is try and work in a bit of extra detail into why everything kicked off. Then you can start looking into politics like 'assisting the enemy' and all that jazz.
Or you can petition your government to stop selling weapons of war to fuel some foreign concern that's damaging your way of life and issue an apology to Kusari.
The amazing thing is that any major changes in the lore between the two Houses will be completely blitzed over by 4.86's changes anyway.
So if Kusari and Liberty signed an alliance or started blasting each other, or did anything inbetween, it'll mean nought. At this point in the development anyway.
Tis the curse of long development times in such circumstances, things go wonky.