There are several factors which are contributing to the overall weak campaign AI performance.
(1) Inability to launch naval invasions or transport troops between hotspots.
(2) Wasting their units in endless small scale raids.
(3) AI countries are locked up in endless wars between each other without any progress, which drains their economy. That may be the reason why many factions have a worse financial rating later in the game then in the beginning (exeptions are Spain, England, Holland and France)
(4) Insufficient recruiting behavior, which seems random and not controlled by any plan.
(5) Sometimes strange attack moves, where the AI attacks a stronger force with a much weaker force.
(6) Inability to retreat on the campaign map when facing impossible odds (a feature even RTW had).
So far, I have no idication that the campaign AI was improved or worked on. Maybe they run out of time, the whole stuff is unfinished, and we will get a better AI opponent with patches. Maybe CA failed to acknowledge that this area needs some serious work. However, from the interviews they did, I had the impression, that they were working not only on the battle AI (which is not without flaws but quite improved over RTW/MTW2 in my opinion) but were designing a new campaign AI too. For example they talked about the campaign AI telling the battle AI what to do in certain situations and implementing a more goal based system overall. So far, I can't see any of that. It's a pity because ETW has many neat new design features, great graphics and the battles are quite fun.
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