Ostea
The Osmen twins argued about the appropriate form of government following the death of their father. This resulted in a split and they formed Ostea and Ostar on opposite sides of the Tormented Straits.
On the southern peninsula of the Tormented Straits Torbin Osmen built Karbraith.
Governance
Ostea is a dictatorship. Torbin rules by birth right and force of will.
Slavery
Most Osteans consider slavery a fine institution. It is self evident that any slave is, by definition, inferior to a free Ostean.
Dragonborn are traded from the north. The males are commonly used in fighting pits for entertainment and while a good fighter can acquire certain perks (access to better accommodation, mates, food, etc.) they are still property. It has even be known for truly great fighters to be given their freedom, though this prospect is more an encouraged myth propagated amongst the fighter schools to encourage compliance.
Slaves and fighters are traded in a very lucrative economy.