This is a story that I was told; a story that I had never heard, and more so, could never imagine to be true. I belive that it should be held some where in the archives of time so that these tremendous times should not be completely forgoten.
So here is the story:
When the Union was very young, the Federation and Empire sought to claim it as their own. The new Union pilots were unable to defend themselves.
Pirates and other such pilots defended the newfound Union. You may have heard of Amai y Hassa. He's retired now, but he was a famous pirate (in fact, he was the leader of Famous Pirate, the alliance). After his raiding runs on the Federation and Empire, he'd fly through Union space for a few days. Union pilots would drop credits on him as a show of respect. After all, the Union would be a very different place without some of these older pirates. Undoubtedly, the small donations helped with the repairs that pirates desperately need (since retaining profitable buildings is almost impossible for a pirate).
The persona of the Union being called "the pirate faction" is at least partly due to our history. True, we have the cloaking device, a technology shared by pirates. However, even more significant, we are born out of a relationship with pirates. Later, as the Union became stronger, the pirates begin treating us as equals to the other factions. While that does mean we became targets for their piracy, it also means that they acknowledged our power and growth.
When we meet these "old" pirates, it's always a mixed blessing. They are pirates. They may raid us or shoot us down. But they also were our nannies. They watched over us until we could watch over ourselves. Many still have our respect. In fact, some have converted to Union alliances. One such example is Winston, from The Ebidium Hand. He was a pirate and converted to a loyal Union pilot.