Soo...we've all heard people saying that the pirates are super powerful and that it does not make sense that a ragtag band of pirates could be stronger than the might of the three factions...so I've come up with a theory.
Remember this mysterious menace that the Vasari were running from? Well, in the years between Entrenchment and Diplomacy, that menace must have come into contact with the pirates somehow. They infested the pirates and that is why they get stronger with each raid. And thus, diplomatic talks have been spurred by the three factions.
However, this is only an initial foreboding of the menace...more is to come...hopefully in Sins 2.