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Three hundred and sixty-five years ago, a group of prominent Europeans gathered in the city of Munster and invented something that would change history: the modern nation.

The Peace of Westphalia created a set of institutions that reshaped the world: national self-determination, exclusive sovereignty of governments over agreed-upon territory, fixed borders and the citizenship rights of people living within those borders. But this new invention failed to take into account groups of people who had lived in the same territory, often longer than the Europeans, but did not necessarily see themselves as members of the Westphalian nation: the indigenous tribal and nomadic peoples.

That omission is behind some of the most painful political confrontations of our age. The Sami, Roma, Sinti, Pavee, Bedouin, Bushmen, Nenets, Inuit, and the numerous native bands of North America have lived in a marginal, sometimes deadly relationship with the modern state from the beginning. These groups often recognize themselves as "nations" – in Canada, the term "first nations" has been widely used, accurately, to describe non-Inuit indigenous groups since the 1980s – but the nature of that nationhood has not been fully defined in a mutually agreeable way.

This question is at the root of the new wave of activism, centred around the Idle No More protests. The uniting factor is a desire for a new relationship between Canada and the indigenous nations within its borders. While there's a lot of disagreement about what this means, there's near-unanimous consensus that the current, paternal, federally-run system does nobody any good.

To make such a relationship work, we will need to define what an indigenous nation really is, and how it works. This year happens to be the 400th anniversary of the first attempt: the Two-Row Wampum Treaty of 1613, which predates the birth of the Westphalian state by half a century. Its distinct purple and white beads declared, visually, that the Iroquois nations and the European colonial government were parallel, equal, independent, and not to interfere with one another's paths.

Such treaties, including the Royal Proclamation of 1763, established that indigenous bands have some of the features of modern nations: control over their agreed-upon territory and its resources, de facto citizenship and the right to govern themselves. For the past 40 years, Canadian courts have recognized these treaties (and land claims yet to be settled) as legally binding; they became part of the Constitution in 1982.

That means that there is no question indigenous peoples have a right to be self-determined nations. But what kind of nation? A full-fledged Westphalian state? An ethno-territorial nation like Scotland and Wales in Britain, or Quebec in Canada? Or some less concrete form of nation built on traditions?

One problem is that those treaties, while allowing independence, also all but guarantee dependence, because they obligate the Canadian state to provide compensation and services. One promising thing about this new protest movement is that it's aimed in part against band councils and their relationship with Ottawa, in hopes of putting independence in the foreground.

That points to another pitfall. Whatever form it takes, an indigenous nation will generally be what is known as a rentier state: its degree of independence hinges on the extent to which it can extract natural-resource and property rents from its land, as well as grants from outside. So environmentalists who have joined this movement in hopes that sovereign native bands will be better ecological stewards than Ottawa may be disappointed: The most independent and successful post-Indian Act nations could well resemble other post-colonial states with natural resources. The Inuit of Greenland, for example, have concluded that their independence from Denmark can best be achieved through aggressive deep-sea oil drilling.

Despite these paradoxes, there is a workable path to autonomy. We've known it for decades. It was recognized by the 1983 Commons special committee on aboriginal self-government and the 1996 Royal Commission on Aboriginal Peoples: a new order of government, parallel to the provinces and Ottawa, run by indigenous peoples on land they legally own and control. After four centuries of ambiguity, this would allow these nations-within-nations to decide what they are.

Editor's note: This column incorrectly referred to the Innu instead of the Inuit. This version has been corrected.