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Elru was a small country of demi-humans on the east-central continent of the world. This country was destroyed by Id in 9993, prior to Fei's delivery to Lahan Village. Dominia Yizkor, the Earth Element, was the only survivor of Elru that she knew of. However, Kaiser Sigmund of Kislev was also from Elru, having been away when it was destroyed. His son Ricardo Banderas is also at least partially of Elru descent.
The east-central continent where Elru had been was not completely abandoned, as Melchior (originally of Shevat) made his home in exile there. Though the entire continent had been removed from the Limiter-reinforced map of the world approved by Solaris, Kislev still had world maps (visible even early in the game) with the hidden continents clearly shown.
Since Solaris is responsible for the creation of demi-humans, it is possible it originated as an experiment by Solaris to see how demi-humans would act or reproduce together.
Elru appears to be a mistranslation of the Japanese rendering of Hebrew אלול Elul. This would be in line with most of the other countries in Xenogears being named after months of the Hebrew calendar. If so, then Thames (タムズ Tamuzu from תמוז Tammuz) was also mistranslated, while the others—אב Av(eh), כסלוו Kislev, ניסן Nisan and שבט Shevat—were mostly still recognizably Hebrew. Six other Hebrew month names were not used in Xenogears.