I suggest if you want the AI at its best during battle, though this is really not it's best, set battle difficulty to VH. Also as stated above, the harder the battle difficulty the more fatigued your men are and morale is more fragile. I play campaign on M so it is possible to actually work diplomatic engagements in the vanilla game. Unfortunately playing on M campaign difficulty somewhat neuters the AI's outright aggression against you.

Tschüß!
Erich