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Ok, so...new to Medieval 2, get rekt!
A couple of starterpoints;
* Diplomacy relies on your faction reputation; Despicable > Deceitful > Very Untrustworthy > Untrustworthy > Dubious > Mixed > Reliable > Very Reliable > Trustworthy > Very trustworthy > Immaculate
As you can probably figure out, despicable is bad, immaculate is good. All factions start on Mixed and you should, from the get go, figure out which way to go. When you aim for despicable, you go for dread characters, exterminate captured cities, use assasins, kill prisoners, don't follow on diplomatic treaties. When you aim for immaculate (most difficult to get!) you go for chivalry characters, occupy, don't use assasins, release prisoners and abide to treaties. Knowing what you're reputation is and what you can get out of it is a key to diplomacy.
Well then, they still hate me, even when I'm trustworthy! Did you take territory that belonged to them? Do you have a war with their allies/allied with their enemies, do you trade with their enemies and all that is explained in Rome 2 but not in Medieval 2.
Next to that; never do business with the Holy Roman Empire, that's a lost cause and you'll end up at war with them even with good relations. It's just the Holy Roman Empire, they tend to do that sort of ♥♥♥♥.
As for the Pope, money usually makes him like you, building cathedrals and large cathedrals and having plenty of priests will make him a happy little bugger. Consequently, if one of your cardinals get elected as Pope or you vote for the Pope, he'll like you a bit more. Next to that, you could always ignore the hat and kill everything, be prepared for extra disorder if you do so.
The main difference in diplomacy between Rome 2 and Medieval 2, is that in Medieval 2, your longstanding allies and tradepartners will stab you in the back as soon as they see an opening. Rome 2 AI feels passive and boring compared to the Medieval 2 AI and didn't backstab.
All in all, it takes a few tries but it'll come with enough killing and conquering.
First of all, if you are aggressive towards other factions, this will affect your reputation.
Secondly there is a natural bias built in, so be aware of which factions dislike others and will tend towards animosity. For example, Venice are typically a treacherous ally to Milan.
Thirdly, the size of your garrisons and defensive forces affect how neighbours percieve you, as does your relative wealth. So if you have a lot of money and a weak garrison, you will be attacked by opportunist factions.
Fourthly, the type of Monarch and their traits and relative political ability make a difference as do the skill of your diplomats. Training each will help you improve your political abilities.
Fifthly, camping in another factions lands will adversely affect relationships unless you have their permission to do so. Some factions will deliberately do this to deteriorate the relationship.
Sixly, it's harder to gain reputation than to lose it. It's always best to select two or three strong allies before you decide to go to war (when alliances are strongest).
Seventhly, breaking alliance will destroy your reputation, so try to make diplomatic changes using diplomats. Betrayal destroys your reputation.
Eigthly. Papal standing and favour (in Catholic factions) has relevance. Building churches of stature will improve and repair this reputation. If you Excommunicated, you will be 'open season' to other nations and this in turn will destroy your diplomatic reputation.
Many players make the mistake of not understanding other factions natural bias and war aims and not allowing their ally to gain it's own objectives, ususally they complain that an ally is next to useless or betrays them. I have not found this to be the case with properly treated allies although it is true they will not generally 'march to the sound of the guns' they can make a good dissuasion to other factions attacking you, especially early on before you develop an 'Attila the Conquorer' mentality.
Bear in mind that political alliances change and you should monitor who your allies are also allied with and who they are not, this additional dimension directly affects your relationship with an ally, since if they at war with someone you try to befriend, they won't likely stay your friend for long!
Also the duration of an alliance will strengthen it, so long-term reliable relationships should be valued over short-termism.
Finally, it's better NOT to extend your political sphere too far afield and engage too many other nations unless they come to you, If you do, you will find that political reactions are triggered which many not be to your advantage, so keep your relations focused as you evolve and you should attract less attention and thereby trouble.
I think that's about it as a guide.
M2TW includes many features that are not written down in a manual or overtly advertised, which makes it the very best of the series.
Many players will say it's just poorly designed, it is not. It's just poorly played generally. The only weakness is in the A/I (especially the campaign A/I), Rebels are not 'active'; A/I factions don't have much variety of action or dilomacy. It's better in Kingdoms and better still in game mods but the game works best in Play by Mail with real opponents and REAL politics. Then it gets really interesting....
Listen to the tone of a discussion when an Ambassador talks, it indicates how favourable they are. Learn how to use good negotiating techniques and strategies.
You'll be wondering what all the fuss is about once you've been playing the game a while.
I hope this helps, enjoy the game!
... which the AI never does...
... so you actually get meaningful alliances like Gondor & Rohan :P
If you want advice on economics, military management and/or character traits and retinue, please say.