The song lyrics were written by the band Van Halen, as they were asked to write a song for the 1979 movie "Over the Edge" starring Matt Dillon. The movie (and the lyrics, although more obliquely) are about bored, rebellious youth with nothing better to do than get into trouble. If you see the movie, these lyrics will make more sense. It's a great movie if you grew up in the 70s/80s you'll definitely remember some of these characters from your own life. Fun fact, after writing the song, Van Halen decided not to let the movie use it.
I see the Middle Kingdom between Heaven and Earth
Like the Chinese call the country of their birth
We all figure that our homes are set above
Other people than the ones we know and love
In every place with a name
They play the same territorial game
Hiding behind the lines
Sending up warning signs
The whole wide world
An endless universe
Yet we keep looking through
The eyeglass in reverse
Don't feed the people
But we feed the machines
Can't really feel
What international means
In different circles
We keep holding our ground
Indifferent circles
We keep spinning round and round
We see so many tribes -- overrun and undermined
While their invaders dream of lands they've left behind
Better people -- better food -- and better beer
Why move around the world when Eden was so near?
The bosses get talking so tough
And if that wasn't evil enough
We get the drunken and passionate pride
Of the citizens along for the ride
They shoot without shame
In the name of a piece of dirt
For a change of accent
Or the color of your shirt
Better the pride that resides
In a citizen of the world
Than the pride that divides
When a colorful rag is unfurled
Like the Chinese call the country of their birth
We all figure that our homes are set above
Other people than the ones we know and love
In every place with a name
They play the same territorial game
Hiding behind the lines
Sending up warning signs
The whole wide world
An endless universe
Yet we keep looking through
The eyeglass in reverse
Don't feed the people
But we feed the machines
Can't really feel
What international means
In different circles
We keep holding our ground
Indifferent circles
We keep spinning round and round
We see so many tribes -- overrun and undermined
While their invaders dream of lands they've left behind
Better people -- better food -- and better beer
Why move around the world when Eden was so near?
The bosses get talking so tough
And if that wasn't evil enough
We get the drunken and passionate pride
Of the citizens along for the ride
They shoot without shame
In the name of a piece of dirt
For a change of accent
Or the color of your shirt
Better the pride that resides
In a citizen of the world
Than the pride that divides
When a colorful rag is unfurled
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In my opinion, Territories is a call for unity, almost expounding on John Lennon's calls for unity in Imagine and his public appearances. This is a call for peace; a wake up call, if you like. Rush is asking us to look through the eyeglass correctly. Quit creating divisions from our differences, but instead, find our similarities. 'Citizen of the World' really seems to convey the idea of the song best.