RE: EarthGov/Nightwatch - In case you haven't spotted it already, just about everything regarding these plotlines have some real and very memorable historical parallels. The EA diplomat even quotes Neville Chamberlain (unintentionally one would hope!) There is sound reasoning behind this too since it's pretty clear the Centauri are only really interested in going after the minor League Worlds along their borders. Earth Dome knows just as well as the Centaurum that they've already taken down one of the "big five" governments and going after Earth at this point would just be too costly. There's more to it of course and it should be clear pretty soon how and why EarthGov are so sure of the Centauri's intentions.
The whole thing about reporting sedition, people being locked up for speaking their minds and the like...well, ever hear of Nazi Germany? Or the Soviet Union? How about a certain U.S. Senator of Wisconsin by the name of Joseph McCarthy? That sort of thing may be been illegal under Santiago, but the thing about laws is that they're made and indeed unmade by governments. It should be pretty clear by now that EarthGov is promoting a climate of fear and intolerance, mostly aimed at the other races. There's a fair basis for this since it was just a decade or so ago that the Minbari nearly wiped humanity off the face of the galaxy...and it wasn't exactly as if the humans won either. They just stopped short of a killing blow. We can only imagine the kind of psychological damage that can inflict on a populous and Clark is taking full advantage of it to solidify his power base.