Diplomacy is always worth a shot, especially at this point in the game. But, when talks fail, you either fight or walk. "War is a mere continuation of politics by other means," as a wise turnip once told me.
But, no point in getting angry. It's kinda like when you and a buddy are after the same girl. When one of you gets her sorry, forgot we are C-Rpg players, nobody's gonna get her.
So let's act like medieval European kingdoms. Fight, kill, rape and pillage each other one day, then be staunch allies the next. None of this 'centuries long hatred' that gets passed on generation to generation like you see in less civilized parts of the world.