In order to understand the concept of sovereignty and how the modern state system operates, one must first understand it’s origins.
The true beginning of the modern state system in Europe was the Peace of Westphalia (1648), which marked the end of the Thirty Years War. The war had not simply been a struggle between Catholicism and Calvinism. It was an international conflict between the Holy Roman Empire and the powerful sovereign states such as France, which sought to ensure that they obtained strategic and defensive frontiers. The power and authority of the Holy Roman Empire were drastically curtailed by the Peace of Westphalia.
The sovereign authority of the Austrian Habsburgs (traditionally the family from which the Holy Roman Emperor had been elected) was effectively restricted to their hereditary Austrian duchies and Bohemia. The empire was no longer permitted to raise troops, declare war or make peace, or raise taxes without the consent of the members of the state system. And the three hundred or so states into which Germany was divided became true states in the modern sense: that is to say, they were recognized as sovereign independent states and were therefore free to form alliances with other states not only within but also outside the imperial league. Moreover the essentially secular basis of the new state system was strongly reaffirmed when the principle Cujus regio, ejus religio (Such government in a state, such religion in a state), first enunciated at Augsburg in 1555, was enshrined in the Peace of Westphalia and extended to cover Calvinism in addition to Lutheranism. Henceforth, the major interstate conflicts in Europe were about power and territory and not about seeking religious dominance.
The state, the basic unit of our modern global state system, is a complex political and legal concept of crucial importance in the study of international relations. According to international law, all states have a legal personality, and even the smallest and least powerful state has to meet certain basic criteria in order to obtain recognition as a member of the state system by other states in the global system of states. It must have a defined territory, a permanent population, and a government which is capable of maintaining effective control over its territory and conducting international relations with other states.”