Consider this a miniature "WC vs. History"! Earlier today you learned that Privateer was originally called "Trade Commander". The change was likely because, well, Trade Commander sounds dreadfully dull (there was actually another pitch at the time called Alien Commander--more on that in coming months)... but having changed the name, what is a Privateer?
A Privateer was, during the age of sailing ships, essentially a pirate sponsored by a government. Nations could create Privateers by issuing a "Letter of Marque and Reprisal" (Wikipedia) to a private ship. The 'privateer' would then have government-sanctioned permission to fight and capture ships belonging to an enemy nation. For their part, they would profit from the sale of captured ships and material. Creating privateers was an especially important tactic in situations where a country might have a disadvantage in terms of sea power, such as the United States during the Revolutionary War.
The background is largely left unsaid in Wing Commander Privateer (although letters of marque were later referenced in Star*Soldier)--but the assumption is clear: because of the desperate war situation, the Confederation has given your character special permission to fight the Kilrathi and pirates. Now let's see one of our talented fans come up with a 27th century letter to hang in our Tarsuses!