The campaign was initially inspired by the excellent computer game by Microprose, UFO: Enemy Unknown (I think it was known as XCom: Terra Defence Force in the US). I was getting a bit tired of playing and running games where PCs were basically gatherered together at the start of the game and told "Your mission is blah blah blah, you've got such and such resources. Don't come back until it's done." I wanted to try a game where players had overall strategic command, and set their own long term objectives. But what I also wanted to try was to capture the whole of the action, in the way that techno-thriller novels focus on the main characters most of the time, but then cut to a chapter from the viewpoint of another character, (e.g. a pilot who's flying a mission ordered by the main characters), then back to the main characters for the consequences.
To do this, I initially gave each player three characters of varying levels of detail. The first was the "Bridge Crew" character, who would be part of the XCom command staff, heads of department etc. This was a fully fleshed out character, with as much background and personality as the players fancied. The second character was the Soldier, who actually went on missions and fought the aliens face to face. These still used the full character rules, but were cut down in design & background i.e. each only had one or two non-combat skills for colour and their personalities were mostly stereotypes and cardboard cut-outs. Finally, the third character was an Interceptor pilot. The pilots were utterly one dimensional: They only had one stat/skill (piloting) and initially only had callsigns rather than real names, but they were a way to get the players involved and rolling dice during air combat.
Next up was the problem of plot. I didn't want to stick too closely to the game in terms of aliens & their motivations, instead I decided to go for a more "real world" background i.e. based on UFO and CEIII reports. So I went for the Grays as the main, behind the scenes enemy (rarely seen in combat) with Gray/Human hybrids as shock troops and Men In Black as their main covert operatives in society. As a flourish I gave the Grays a bio-engineered slave race of servitors, known colloquially to XCom as "those bl**dy pesky little orange aliens". Later on, I introduced a 'third force' into the equation. The wedge shaped UFOs that were becoming more popular all the time carried (I decided) the "Golden Androids" a machine race at war with the Grays, and generally inimical to all DNA based life. This gave me a good plot device for why the Grays wanted Earth, and also let me use some nice Terminator-esque miniatures I had lying around :-) Much later on, I began to introduce the idea of yet another race of aliens visiting Earth, the Plieadeans. These were a quite benign race, utterly beyond Earth's technology. The Plieadeans made their presence felt chiefly by not being there. When they did make contact with XCom, it eventually turned out to be the Grays masquerading as Plieadeans. So the race never existed after all...or did they?
Finally I decided that I could play up the involvement of the funding nations (I settled on nine funding nations as it had a nice ring to it) so I decided that despite the threat to all humanity, the governments of Earth would be doing the usual round of bickering and politicking and trying to stab eachother in the back. For the sake of the game background, I put Russia back in the hands of a an elected Communist regime, riding the crest of a wave of economic recovery. I also turned the United Kingdom into the United Republic, after the recent dissolution of the monarchy, mainly to give me the chance to turn it into an alien police state halfway through the first series.
NOTE: I've followed the practice of using TV and Cinema terms when talking about UFO:EU. I'm a great believer in visualising the action in a familiar format in order to make the game come more alive. For example, the players were encouraged to imagine which actors would be playing their characters in a film or TV show. Tricks like that, and using 'cinematic' gamesmastering techniques like dividing the action into scenes and using rapid cuts and fade-outs in descriptions, are both effective and fun.
Microprose's XCom series of games
Gerry Anderson's "UFO" TV series from the 70s
Babylon 5 (for the epic story arc concept)
The X-Files (for the first two seasons, anyway!)
The UFO 'flap' surrounding the "Roswell Alien Autopsy" film
The "XCom: Terra Defence Force" novel by Diane Duane (who thoughfully set her XCom base in almost exactly the same place as my players, and gave me the idea for the alien base under Scopi)
Todd Zircher's "Shadow Command" campaign, which used a very similar campaign premise.