Board Thread:Lore Discussion/@comment-24587225-20150902024621/@comment-1600847-20180728205635

Blademaster Jauffre wrote: They didn't manipulate him, they outright collaborated with him.

He used to be a Thalmor agent, right now he's just upset because they stabbed him in the back. Yeah, this is how I think it went (naturally this is speculation)

Ulfric comes back to Skyrim from the Great War to find Talos worship banned. Having fought for years as a loyal legionnaire, only to see the Empire capitulate to the exact same demands Dominion made before the war started, makes him feel like he fought for nothing. He feels betrayed and is vocal about it.

Ulfric's then approached by a Dominion agent who makes him an offer: they'll assist him in making Skyrim independent from the Empire. While Ulfric hates the Dominion, he believes that an independent Skyrim can defeat them, so agrees to work with them, intending to betray them later... only the Dominion beats him to the punch during the Markarth Incident by having the Imperials arrest Ulfric and his militia.The Dominion maneuvered Ulfric into causing a fuss over Talos worship so they could insist the Empire allow Thalmor free reign across Imperial lands.

Thus the Thalmor Dossier saying: "The so-called Markarth Incident was particularly valuable from the point of view of our strategic goals in Skyrim, although it resulted in Ulfric becoming generally uncooperative to direct contact."

The Dominion was in direct contact with Ulfric, used him, betrayed him, then he stopped working with them.