At the end of World War II, the Greater Nazi Reich and the Japanese Empire decided to divide the former United States into three areas: one area with the direct influence of the Nazi Reich, which became the official state of Nazi America, one area under the direct influence of the Japanese Empire, which became the official state of the Japanese Pacific States and one area between the two as a buffer, now known as the Neutral Zone. A delegation of the remnant of the U.S. government, which had already capitulated by 1945, was sent to the "Peace Conference" that decided the division of the former USA, but had few words to say at the conference. The delegation was even forbidden to arrive to the Conference with the flag of the former United States or of any other states of the Union, and could not decide the name of the new official state. The Japanese Empire and the Nazi Reich agreed with the "formula" of "Neutral Zone". The Neutral Zone is politically neutral and politically independent from both the Nazi Reich and the Japanese Empire, but is economically dependent on the Nazi and the Japanese blocks, which both exercise various methods of pressure on the Neutral Zone.
The territory of the Neutral Zone is composed of the central region of the former USA, that both the Nazi Reich and the Japanese Empire relinquished of occupation. From Idaho to New Mexico, its territory is the smallest of the three states, including the eastern third of Washington State, almost all of Idaho, the western third of Montana, the western two thirds of Wyoming, the eastern half of Utah, the Western two thirds of Colorado, central part New Mexico, and a small region of western Texas. The country borders Nazi America to the east, the Japanese Pacific States to the west, and Mexico to the south.
In the second season, it is later revealed that the Neutral Zone, included a partition of former Canada, which was partitioned as well after the World War II, including a region straddling the boundary of the former provinces of British Columbia and Alberta extending north towards what was the Northwest Territories. This region serves to divide the coastal portion of British Columbia and the whole of Alaska, which fall under the jurisdiction of the Pacific States, from the remaining territory of Canada, which has been incorporated into Nazi America.
Flags and Emblems
Though it is never shown onscreen and is only mentioned in the credits, the Neutral Zone has its own national flag. The delegation of the U.S. remnant to the "Peace Conference" managed to trick the Nazi and Japanese delegations into using a variant of the Denver City and county flag, which is a zigzag white stripe which horizontally separates a red field below from a blue field above. However, the delegation removed the center yellow circle on the blue field due to its resemblance to the Japanese Rising Sun. The flag was accepted in the Peace Conference of 1947. Given the particular patterns of the flag, it may have contributed to the colloquial name of the zone as the "Rocky Mountains States", though by 1962 it appears that the flag is only flown in the capitol government of the Neutral Zone at Denver, as well as possibly a few other mayoral cities in the region (given that in Canon City the flag is never shown).
In our world, the Flag of Denver is currently used and was first introduced in 1926, having been designed by a high school student.
Politics and Policies
The capital of the Neutral Zone is Denver, which was the only major city (at the time) in the region that both the Nazis and the Japanese Empire relinquished control over. However, the city is small and poor compared to San Francisco and New York City. It is unclear what the methods of election and governance of the Zone are, though it seems that the "Head of State" of the Neutral Zone takes the title of "Governor" (though governor is usually the title of the head of a non-sovereign or sub-national level of government). Moreover, the country is politically neutral and does not possess an official army or national militia. The local police itself is limited in its armament and size, so much so that they are only active in major cities and along main transport routes (though Joe Blake and Juliana Crain never encountered any onscreen). This has the advantage of helping the American Resistance to operate in the country largely unopposed by the local authorities. On the other hand, in an effort to combat these problems, state officials give license to "bounty hunters" to operate in the territory in place of the police. This consequently allows vicious bounty hunters such as The Marshal to operate unchecked, turning the country into a place resembling a "frontier" with little or no law. Interestingly, in the Neutral Zone all White, Latinos, Black people and even Albinos can live relatively undisturbed, which is evidence that the racial policies of the Reich are not enforced in the Neutral Zone.
Economics and Technology
The Neutral Zone has a poor economy, dependent on Nazi America and the Japanese Pacific States. It is dependent on the importation of raw materials, including oil. Though not the official currency, the Reichsmark is used in almost all transactions within the country.