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Equestria as portrayed in My Little Pony Friendship is Magic as being governed from Canterlot by female ponies called Alicorns.

In the season 5 episode Princess Spike, we also get another political/governmental element in the form of local representatives from Equestrian communities and city-states who periodically come together as the Grand Equestria Pony Summit.

The GEPS probably was originally founded as a political institution by Princess Celestia after she banished her sister Princess Luna to the moon for roughly a thousand years. After all, this was a time lasting whole centuries when Celestia was sole royal ruler of Equestria.

It became unwritten convention that no new national laws covering all of Equestria could be passed without the consent of the Grand Equestria Pony Summit.

Another feature of Equestrian politics and government was the local autonomy granted to cities and communities like Manehattan and Ponyville and Appleloosa.

And so pony Equestrian government under Celestia combined royal rule with elements of parliamentary semi-democracy, federalism, and local self-government.

Celestia probably promoted Princess Cadance and Twilight Sparkle to Alicorn princess status because Celestia and Luna eventually will grow old, and yes, die.

Perhaps Celestia and Luna will step down, to be replaced completely by Cadance and Twilight as royal rulers, and under the sole rule of Cadance and Twilight the princesses will become almost mere rubber stamps for the delegates to the Grand Equestria Pony Summit, and Cadance and Twilight will concentrate mostly in such duties as local rule of the Crystal Empire, raising the sun and the moon, and promoting friendship.