Sort of like in Civ... it would just show up in the profile and would introduce more diplomacy as people will see a bit of your past dealings and consider whether or not you would be a safe person to ally/make peace with.

How do alliances work here? Do members ever backstab other members?

It has been known to happen ;)

Right now, alliances are pretty organic. People talk through PM's, make threats, etc. I kinda prefer this way though.