January 1, 796 S.C. / 487 I.C.: in the Astarte star system, a 20 000 spaceships Imperial fleet under Reinhard von Lohengramm's command is about to be cornered by three Alliance fleets of 13 000 spaceships each. Against the advice of his subordinates, Reinhard decides to strike first in order to defeat each fleet before they can join. The Allied commanders, trusting the overall odds of 2 to 1, don't anticipate this and rebuff Yang Wen-li's advice to quickly regroup their forces.

After the destruction of the 4th and 6th fleets, Reinhard's fleet engages the 2nd Fleet. When its commander is wounded, Yang takes command and manages to escape utter destruction. In Phezzan, Adrian Rubinsky, administrator of the planet, and Nikola Boltik, his main adviser, make comments on the battle and note that it won't change the strategic situation.

In Heinessen (capital planet of the Free Planets Alliance), a memorial for the soldiers who died at the battle of Astarte is held. The warmongering speech of Job Trüniht, the Secretary of Defence, is interrupted by Jessica Edwards, whose fiancé was killed in the battle: she asks him why the advocates of war always sacrifice the lives of others while hiding in safer places. While going home, she is attacked by members of the Patriotic Knights Corps (P.K.C.), a nationalistic organization secretly led by Trüniht. She is rescued by her friends Yang and Dusty Attenborough and barely escapes death. The next day, Yang is promoted to rear admiral in command of the newly formed 13th Fleet. His mission: to take the Iserlohn fortress, a powerful space station which has repelled every attack.

In Odin (capital planet of the Galactic Empire), Reinhard is promoted to imperial admiral after his victory at Astarte. With his friend Siegfried Kircheis, he pays a visit to his elder sister Annerose, the Emperor's favorite. In a flashback, Kircheis remember how he and Reinhard became friends, how Annerose was taken away from her home to be the Emperor's favorite and how they came to hate the high nobles and the Goldenbaum dynasty.

A new admiralty is created for Reinhard. He chooses commoners and lesser nobles to command his fleets: August Samuel Wahlen, Cornelius Lutz, Karl Gustav Kempf, Fritz Josef Bittenfeld, Ernest Mecklinger, Wolfgang Mittermeyer and Oskar von Reuenthal. Meanwhile, Maximilian von Kastrop has rebelled against the Empire. He thinks he is safe because of the "Artemis Necklace", a system of powerfully armed satellites built with the help of Phezzan. Reinhard sends a fleet under Kircheis' command to put an end to the rebellion. He manages to destroy the necklace. Kastrop is killed by his retainers and is the only casualty of the operation.

Yang decides to take Iserlohn by a ruse. The Rosen Ritter (Knights of the rose), a ground combat unit made of Imperial exiles, will pose as an imperial crew and infiltrate the fortress. Yang's staff is introduced: Murai, Patrichev, Fischer (a master of fleet maneuvers) and Frederica Greenhill, daughter of admiral Dwight Greenhill. The Iserlohn fleet is lured away from the fortress by decoys. When a damaged imperial spaceship asks for help, the commander of Iserlohn, who doesn't know where his fleet is due to radar jamming, authorizes it to dock...

May, 14, 796 S.C. / 487 I.C.: a fake imperial spaceship docks into Iserlohn. Walter von Schenkopp, commander of the Rosen Ritter, pretends to have important information and takes control of the center of command. The Iserlohn fleet comes back, only to be destroyed by the fortress' main weapon, the "Thor's Hammer". The fall of Iserlohn dramatically changes the strategic balance: Yang hopes it will lead to a peace treaty. Back in Heinessen, he wants to resign, but is promoted to vice-admiral instead.

Paul von Oberstein, chief of staff of the Iserlohn fleet, is in trouble. He saw through Yang's plan, but his commander didn't listen to him, and he fled before the destruction of the fleet. The three chiefs of the Imperial fleet resign, but want to make him responsible of the defeat. Oberstein meets Reinhard and explains how, like him, he hates the high nobles and the Goldenbaum dynasty, and offer his help. Reinhard agrees and obtains his pardon by advising the Emperor to refuse the chiefs' resignations.

Thirty years ago, marquis Klopstock was exiled form the imperial court. He asks prince Braunschweig, the Emperor's son-in-law, to ask forgiveness on his behalf. Braunschweig invites him to his daughter's birthday party. Klopstock's real goal is to bring a bomb in order to kill the Emperor, who will be there. At the party, Reinhard clashes with baron Flegel. The bomb is taken away by accident and makes little damage. Klopstock commits suicide and all the incident is kept secret.

Yang is sent to Thernussen (Heinessen's second largest city) with his ward, Julian Minci, to attend a ceremony at the Military Academy. He meets Jessica Edwards, who is campaigning for the Peace Party candidate in an upcoming election. We learn that Yang, while being loyal to democracy, has no love for the current politicians. The P.K.C. sets a bomb in the Peace Party's headquarters, killing the candidate, but their plan backfires when Jessica, who is the new Peace Party candidate, wins a landslide victory.

Susanna von Benemünde, a former favorite of the Emperor, wants to get rid of Annerose and win back the Emperor's love. She teams up with Flegel, who hopes that a scandal involving Annerose will lead to Reinhard's downfall. Annerose is abducted: she is to be killed and found with a supposed lover from the lower class. She is rescued by Kircheis, Reuenthal, Mittermeyer and Oberstein. Benemünde is forced to commit suicide. Flegel has been smart enough to leave no proof of his involvement, but Oberstein and Reinhard suspect him anyway.

In the Free Planets Alliance, the capture of Iserlohn has intoxicated the public, the military and the politicians. It is possible to invade the Empire from Iserlohn, and many people think it's time to conclude the crusade against tyranny. In the High Council, Joan Lebello (Secretary of Treasure) and Hwan Lewi (Secretary of Human Resources) think it's better to sign a peace treaty because the economy in on the verge of collapsing, but the Chairman explains that they will lose the next election unless they achieve a substantial military victory, so the High Council decides to invade the Empire.

August, 22, 796 S.C. /487 I.C.: the invasion of the Empire has begun. Reinhard implements a scorched earth strategy: all food is taken from the frontier zone, so the "Liberation force" of the Free Planets Alliance will be forced to feed the inhabitants. Reinhard plans to attack the invading fleets when their supply lines will be overstretched. Commodore Ulrich Kesler carries out the orders but, in the process, has to face someone from his past.

The Free Planets Alliance fleet has conquered more than 200 star systems (50 million inhabitants) without fighting. In Iserlohn, vice-admiral Alex Cazellnu drafts a supply plan, but he is worried about such a heavy burden: for him, Reinhard clearly wants the Free Planets Alliance to exhaust its resources on behalf of the liberated planets. The supply fleet is destroyed by Kircheis because Fork didn't think such an attack was possible. Yang, fearing a scorched earth policy, convinces his fellow fleet commanders to ask for a withdrawal. Riots break out on many planets because of the food shortage and the looting of the soldiers. Fork experiences a case of hysterical blindness in the face of his plan's failure. In Phezzan, Rubinsky grants a new loan to the Free Planets Alliance to maintain the balance: he hopes to economically control both the Empire and the Alliance. October, 10, 796 S.C. / 487 I.C.: Reinhard orders to launch the counterattack.