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From Conflict of Nations Wiki
In Conflict of Nations, your diplomatic relations are pivotal to securing a victory for your nation. Are you going to ensure a peace treaty with your surrounding neighbours? Or are you going to invest in a coalition to secure victory as a team? There currently are 5 diplomatic relations which are available in the game.
This relation allows two players to share their intelligence, meaning players will be able to see each others units and buildings.
Peace
The peace relation is ideally used as a stepping stone to start a friendly diplomatic relation with another nation. This is purely aesthetic and does not affect game mechanics.
Right of way
Right of way allows players to use each others airports and roads.
Trade Embargo
The trade embargo relation will block all your Market offers to the receiving player. So, if someone does a trade embargo on you, you will no longer be able to see their offers and vice versa.
War
Pretty self explanatory. When your nation needs to expand, this is what you must resort to.