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However, as you suspected the long term benefits are not really there. Past very early game this usually gets thrown by the wayside as I've never come across too many instances where I don't have sufficient influence for any dealings, or I just don't care. In short, it has its uses but you aren't wrong in thinking it deserves a re-assessment.
One thing i am not sure about is whether it also influences the cost of science and trade deals. Technically it should since they are diplomatic costs.