Ok, here are my thought about a diplomacy and espionage system that I had for my game and some other board game variants.
The council: First, players would have to create the wizard councils before beign able to do any diplomacy at all. Or maby only limited diplomacy is allowed. A council can be formed when each player can create a chain of communication. Ex: Player A Knows player B which knows player C. C and A does not know each other but they can still form the council. When the council is created, players vote for a council leader what will take some decisions during the game.
The council leader can eventually change if a majority of players reject it's leadership. And the council can also later in the game be disolved and not beign able to be built again until the end of the game.
Laws: During each meeting, the council leader can choose to pass a law. A law adds a special rules that changes the game play while the council is active. I like the "Twilight imperium" board game model which is: If the law pass, a rule is applied until the end of the game, if the law does not pass, a bad event happens now. The laws the leader could be selected from a random or a fixed list of laws.
Now to add a twist, I had an idea for a "twilight imperium" variant. In the "Dune" and "Junta" Board game, you have a mechanic where the leader distribute secretly "spice" or "money" to the players and players have to decide if they accept or not the distribution by voting. Now I would combine both mechanics. The leader gives "roles" secretly to the other players of the coulncil which each have a power value. When players vote for or against, they must also consider the power they get. IF they vote for, the law pass and they get the power given by the leader. So the leader can try to bribe players to vote for a certain law.
Now this power could have different uses. First "role" could have a one time use special "veto" ability which makes you reveal the power you have in the council. And the power level also allows you to overthrown and take control of the council which makes you win the game. So if you give too much power to the same player he will eventually win. But since the leader changes, you never actually know how much power each player has unless they use their role's veto ability.
Trade: After the voting of laws, player can perform exchanges. I insist that you should be able to trade anything for anything. I hate in Civ where you can only exchange tech for tech, resource for resource, etc. I would also prefer an open trade system like in "settlers of catan" baord game: one player at a time, they show what they are willing to give and other players makes offer. You should even be able to exchange services too, like "clean the corruption of these 4 tiles", change the terrain of 3 of my tiles, etc. I always fin that in Civ/Mom/Moo there is really few things you could exchange. It would be fun to have a lot of exchange options.
Trade Treaties: I like th reasearch and trade treaty ideas of MOO2. In order to possibly create tension during the game, One of the way to handle these treaties is during each turn, points are generated by these treaties, but players have to deal with each other how they will share these points. So one player could decide to take all the bonus every time forcing his opponent to break the treaty. It creates a situation where backstabing and abuses are possible.
Alliances: Alliances could make you win the game together. But in order to add some spice to alliances, besides allowing to move in each others territories and sharing stuff, it could allow your ally to move your own armies and or have other control over your empire. This mean that you open a door to your ally for backtabs. This is why trust is important. If you stay as allies, it can make the game easier to win, but you could easily get betrayed by your ally who decides to win the game by himself at the last minute.
Espionage and random events: You should be able to espionage your opponents for stealing information or for sabotaging stuff. But the sabotage you can do must be the same as random events, so that the players does not suspect that they have been espionaged. So all spy action creates random events if successful.
You could be allowed to place spies in ennemy cities or empires in order to get information, destroy buildings, etc. In combat, if you attack a city which has one of your spy, you could do some disturbance, bribe ennemy generals, open gates from the inside, etc.