I don't really have a problem with you proving that you can get money out of an AI by declaring war, and then backstab them by making peace. The problem is that you can apparently do this more than once a turn, and without consequences. Rather than messing with the diplomacy too much, I'd have thought the simplest solution would be to have a cool-down period on peace treaties. So in other words, if you make peace there is an enforced 5 turn period where you can't declare on that AI again. It doesn't make a great deal of sense to be declaring war and then making peace multiple times, certainly not in the same turn.

Another way of it doing it would be that the AI could simply refuse to make peace if you keep doing this; "We don't trust you", with a diplomacy penalty with all AIs.

Yet another way of doing it would be for later peace treaties to cost more, again because the AI rightly doesn't trust that you'll keep the peace.

A pease treaty should enforce peace for at least a few turns.

Hmm, I suspect they may put that down under "exploits which can be fixed by not doing that"... having said that, maybe there's an easy fix.

Like merlinme said I don't think diplomacy needs to be a zero sum game, at least not for a single round of diplomacy. If you are scary enough then arguably it should be very less zero sum (eg I can imagine Umbar giving you 1200 to declare war on Altar and then Altar giving you more money to declare peace!) but the AI needs to have enough memory to not get repeatedly sucked into it, even after the 'will not talk to you' timer runs down. So if Umbar paid you to declare war and then you made peace again without ever fighting the target then Umbar should be completely unwilling to pay you to start any more wars (at least not for a long, long time).

Disturbingly this is the second thread in a row I have posted to agree with merlinme...