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In your case, you plummeted far past that point more or less instantly. So you got the demand, but paying it was not enough to sway them.
As long as you do not expand, the other factions will not expand either. That did cause some unintended behavior, but as far as I know it still works like that so you have no time pressure.
Also, having less trade partners is not necessarily a bad thing. You can trade more with larger ones.
I think it is worthwhile to bring that expansion protection back, but more localized.
Did they snatch a nearby region?
Unless you start near a free region, trespassing penalties will make it difficult to grab one. I think colleagues should be enough to prevent trespassing penalties.
I think this could be improved a bit to make starting locations a bit less luck-dependent.