Having been pointed to this by Krysia's Krusader I thought I would take up the discussion of MP diplomacy.
It is one of the less "threshed out" subjects as it is less to do with game mechanics & more with human interaction.
Yet "getting the right agreements in place" will absolutely make or break your chance for victory.
In my experience alliances are usually formed out of necessity - that is a group of players realize they need to start assisting each other or another player (or alliance) will simply steamroller them all or simply to gain an advantage to get ahead.
The tricky point in alliances is of course that internal suspicion may prevent them from being really effective. That is: "A something for something agreement where both still worry about sneak attacks from the partner" will be a lot less effective than alliances where you fully operate as a team and distribute priorities so as to be most effective for the team - regardless of whether it benefits one ally more than the other.
The last is however tricky if you are not running an actual team game and even more so if there is no coop victory allowed - yet in some cases doing so may be your only chance at victory at all.
In my experience a successful alliance is based on the following basis:
It genuinely improves the chances of victory for all involved. That is when forming an alliance you must give the ally a real (though maybe not likely) chance at beating also yourself. Otherwise the ally will have no reason to wholeheartedly join unless he is just trying to get someone else.
This also brings up the point of when to form an alliance - IMO (sort of obviously) you do it if doing so improves your chance at victory. If you are already so far ahead that you are kind of giving away a chance of victory to someone having no chance before & whose assistance you don't really need, better just don't ally.
In my experience forming alliances usually is easy. If there is a real advantage in doing so the other player will usually see it too. Sometimes a lot of haggling will occur as to the exact terms. If the other player is unreasonable (not wanting to give you a realistic chance) - I usually drop it, unless I have absolutely no choice, and simply suggest trading something for something and a pact simply as a "mutually beneficial financial arrangement & otherwise no strings" and watch the guy like any other opponent.
Trust is the basis of any alliance, lacking that "obvious mutual benefit" can do - but on the last expect it to last only to the point where the ally sees more benefit from an altered strategy. Complete openness is the best way to ensure that trust stays.
When seeing any of above its time to get war preps into gear - watch the ally's cities as closely as your own - ensure you have infiltration (as once the pact goes you won't be able to see what they do if you don't have it).
It is very wasteful for allies go get into a "mutually directed arms race" but getting caught unprepared often means sudden death. Directly asking the other person what they are doing will often make them declare their intentions - either directly or it will show in the rhetoric used. Of course if you sure it's warranted you may opt to sneak attack first.
Written by buster