Is diplomacy necessary?

No, that's not interesting at all. It's the same as using cheats. You might as well just give yourself one Azure Dragon to make things a little easier.

He's not suggesting setting up diplomacy for himself, but for the computer – i.e., the opponent in this case – to make things more difficult for himself... )) But, of course, there's not much point in that... It's easier to just give the computer a decent army at the start and try to fight it... ))