Diplomatic AI is almost completely non-existent and desperately needs to be improved. It seems that this stuff has not been adjusted for quite some time.

Here's some things I would like to see done:

• ADD MORE POSITIVE MODIFIERS! I haven't counted, but almost every possible AI Relation tag in CoreAIDefs.XML is negative.
• There are all sorts of negative traits without positive counter-traits. Example: we have "WarHappy" and "Isolationist" but not "Peaceful" or "Cosmopolitan."
• We desperately need a modifier with several levels of severity for AI underestimating a player's war power. This should be triggered and raise when the AI loses a battle it expects to win. (Alternatively, I would love to see this handled with behind the scenes code that the AI uses to evaluate actual strength.) 
• There needs to be modifiers for assisting in war, going to war with an enemy, providing aid in wartime, etc.
• There should also be negative modifiers for the opposite.
• There should be a modifier for a player having little of value to the AI.
• There should be modifiers for "Good" races who take pity on a player who is victimized by war mongering nations.
• There are more possibilities as well.
• Remove/over-ride negative modifiers. Rebalance stupid modifiers
• There are redundant modifiers for things like "Power" and "Military Power", and "Wanting to unit the world" and "Just loving war." These need to be cleaned up so that they don't stack into stupidity.
• Some of the modification numbers are just bad. This is most evident on military strength comparitors. Due to the AI's propensity to make tons of crap units to inaccurately inflate how strong they think they are compared to players, the AI should be under-estimating its strength. Instead it seems to be doing the opposite. It considers your military to be extremely weak if it's 1/4 the strength of theirs, but considers their military to be extremely weak only if it is 1/10 the strength of yours or less. Was this a mistake? These numbers should be flipped.
• Improve how power is determined
• Right now the AI is valuing quantity over quality. It's always done this, and in the past it used to be much worse, but it's still a problem.
• The easiest way to do this I think is to increase the scaling of "perceived power" to be more representative of reality. That is, a unit with doom hammers should be worth A LOT  more than a unit with a maul.
• Additionally, the math used to calculate combined military power of an entire faction may need to be changed. If it's additive, then it needs to be redone. Masses of units should amount to be LESS than the sum of their parts, since they cannot be used as efficiently.