10 Events That Changed Star Trek Forever
9. The Treaty Of Algeron
It's either the biggest mistake the Federation ever made if you're team Pressman, or the finest bit of diplomacy in decades if you're team Picard. If you're team 'stuck in the middle' Riker, though, just head down to the holodeck and play the role of a certain historical chef/poor-man's ship's counsellor. You'll be spilling the beans (perhaps literally) in no time!
A peace agreement signed in 2311, the Treaty of Algeron redefined Federation relations with the Romulan Star Empire. It further codified the terms and delimitations of the Romulan Neutral Zone, making any flagrant trespass by either party an act of war. Furthermore, it forbade the Federation from developing or using cloaking technology. The whole Pegasus debacle/cover-up stemmed from Admiral Pressman and others at Starfleet's refusal to accept this latter part of the deal, considering Starfleet's lack of cloaking technology a major tactical weakness.
Treaty ratified, the Romulans practically disappeared, as had been the case before the encounter with Kirk's Enterprise in the 23rd century. They only returned in an official manner to galactic affairs in 2364 in The Next Generation episode aptly called The Neutral Zone. There had been the odd foray before that, such as that one time where a certain alternate lieutenant was present, but now they were really back to meddle once more.
The main impetus for the signing of the treaty came from what is known as the Tomed Incident which also took place in 2311. Very little information is given in canon about this confrontation between the Romulans and the Federation, other than the fact that it cost thousands of lives. Beta canon does go into more detail, which you can read all about in the article on the 10 Biggest Secrets Revealed In Star Trek Novels.
Before Tomed and Algeron, and after Balance of Terror, the Federation and the Romulans had engaged each other in a number of skirmishes, including Kirk's incognito cloak-stealing mission, with a brief period of peace in the co-parenting of the backwater planet Nimbus III starting in 2267.
The Romulans were also up to their ears in the plot to prevent peace between the Klingons and the Federation, which included the assassination of the Klingon Chancellor Gorkon after that Klingon moon memorably went boom.