It's a hardcoded thing, and it's a content thing. There's a (relatively) small amount of work needed to implement it, but it's focused and involved enough that I don't feel inclined to attempt it (my code contributions are generally superficial and rather dodgy, or very deep but incredibly narrow - NationGen is a convoluted nest of spaghetti code, so any complex change is fraught with hard-to-debug unintended consequences), and it's something that's never moved Elmokki overmuch - although we did semi-recently lay out what it'd take to make it happen. Right now, though, it's the academic year so Elmokki is minimally involved with NationGen. The recent underwater patch did help push us more towards adding UW nations as an option, and if there actually is a forthcoming "second half" of said patch, it could get us to the tipping point, especially if something is done to fundementally change UW's strategic "flatness". We Shall See - I'm sure no one will be shocked to hear that I actually am very keen on adding merhoburgs...
(To clarify, if it's not glaringly obvious, NationGen is Elmokki's baby, and they're responsible for almost all the coding therein. I've added a few chunks of code (and doggedly tracked down some very deeply embedded bugs), but my main contribution has been content - lots and lots of content. I've also helped shape the project's direction by shrilly whining for specific functionality, and then gleefully exploiting said functionality to the fullest - having someone make good use of what you make is always a nice motivator.
But NG has been around for a looooong time (2007? 2008?) and my own involvement with its rats'-nest of code and content has only been over the last 18mo, so I tend to be reluctant to attempt anything too involved.)