Wrong file, wrong deduction. This .xml deals with the weight of the different items in diplomatic negociations, and the influence your relationships and reputation have on it.
In essence, every possible diplomatic possibility has a base value, modified by your standing*standing modifier to this in the .xml and reputation*reputation modifier to this in the .xml (and probably a bunch of other, more hard-coded factors). The final florin value is what is checked against the AI side of the nego to acertain wether the terms are Balanced, Demanding, Generous etc...
In this case, the zeros means that your reputation and relationship with the given faction have no bearing on the price of the item "we will cancel alliance", which is pretty much a given since it's usually immediately applied and is not a "real" diplomacy option. It also means that when you use them in a threatening manner ("accept or we're not allied no more"), they won't be less intimidating to people who don't like you so much, nor will they have more weight if you're a generally nice bloke. And vice versa I mean, 0 is 0 both ways

. Am I being clear here ?
descr_faction_standing.txt is the file you want to check out to understand how reputation works.
@supadodo : I *think* you only lose rep that way if you side with the attacking faction, in which case it may count as "Betrayal!" instead of merely "alliance in tatters" to the defending faction. It's hard to know for sure, but that's what I'm led to believe through experience. I think that's why AI factions most often leave the aggressor's side, whoever he is.
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