I had this message in my EB campaign the other day. The Macedonians had started a war on me (Rome) in Illyria for no good reason. Then I shipped over two massive armies to their back door in South Greece and got that message.
At the time, I did not really understand the strange message and had to conquer Macedon to meet the Roman EB victory conditions anyway, so I refused. I was then immediately - same turn - attacked by one of their armies hiding in South Germany.
Based on this experience, I think it arises in situations analogous to that of Japan in 1941 - the AI is saying, in the long run, we're not sure we can beat you. But we in the short run, we can hurt you.
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