I'm currently playing a game as Venice. After getting attacked by Milan, the Byzantine Empire and Hungarians, I lost everything but Iklarion and Rhodes. I decided to keep playing to see how long I could last with only 2 settlements.
One thing I noticed is that nearly every turn brings me a "relation improved" message. After a couple of turns, all the others nations now have amiable, good and very good relations with me.
I guess it's the opposite whenever you expand or get richer. That would explain why relations always deteriorate in a "normal" game unless you pay tributes.
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