i don't think the game is meant to be heavy on diplomacy. there are more negatives than positives, so in the end, you'll have to fight someone to win the game. that's probably by design, not just coincidence. you can keep some friends for the whole game if you are more powerful than them. factions of your own ideology tend to be neutral-friendly as long as you don't kill other factions of your shared ideology, so you can probably ally them later on instead of wiping them out. other than that, war against the other side is pretty much inevitable unless you are so far ahead in power that noone dares attack you (in which case you've pretty much won anyway), or if you win by master quest/spell of making before the mid/late game wars break out.

don't know if the game needs a deeper diplo system. it's a war scenario after all - two conflicting ideologies that will inevitably clash at some point. not really the type of setting where a diplomatic builder victory is the main goal.