The introduction to Agatha Heterodyne and the Monster Engine uses the term Pax Transylvania for this situation; it is also used in an alternate future in read by Othar Tryggvassen referencing diplomatic activity after a Wulfenbach-Heterodyne alliance.
It is based on one simple subsidiarian, patriarchal principle: "Don't Make Me Come Over There". Aggression between or against his client states is not allowed, nor is the possession of any Other technology. Violation of this rule is met with swift and overwhelming force - not unlike a surgical procedure may be used to keep an infection from festering - and the aggressor's lands and property are forfeit. Through the enforcement of this policy, Wulfenbach's empire has grown from his ancestral seat to encompass over half of Europa.
In exchange, the nobles and minor royalty rule their own domains in their own manner without interference - save basic humanitarian laws forbidding discrimination based on race, religion or manner of birth(primarily because Klaus didn't want persecuted constructs trashing the landscape, and included this in the Peace) - and become eligible to claim the benefits of imperially-sponsored railroads, educational institutions and other such public works. Moreover, given the list of Wulfenbach military units, it's clear that the Baron also takes responsibility for the roads, fighting fires, and long-distance communication (though these units serve a dual purpose as Wulfenbach's most destructive assets yet seen).
Possibly relevant outside informationEdit
The names "Pax Wulfenbachia" and "Pax Transylvania" are a play on Pax Romana, a name coined by Edward Gibbon in the 1770s to describe the ancient Roman Empire as it was during the first two centuries. Rome excelled at maintaining infrastructure and adopting conquered nations' technology. In most cases, they also allowed a great degree of self government to those they subjugated; the requirements were only that the Roman Emperor be given standing in the pantheon and that the taxes be paid. Pax Romana differs from Pax Transylvania in that little expansion took place during the period in question.