The difference is the Crayter Military now operates under the Crayter Republic IFF, which means, it's the military IFF.
If the Liberty Navy was renamed the 'Liberty Republic' it would still be the military.
Jesus christ.
EDIT: An even greater example would be merging all of Liberty's Corporations into one group, and then shoving them into this 'Republic'.
I'm sure you guys would love to argue that this makes it the Navy instead. Don't have civilians and the military under the same IFF if you don't want this sort of issue.