Here some guide lines how to form Alliances in Eador:

Hints: Always use Scouts negotiating for alliances. Diplomacy skill is a good choice in this matter, seeing as it increases rewards received for completing missions and winning on the arena, lowers buying and repair costs, and additionally OPENS new dialogue options while talking to NPCs.
Karma also have impact during negosiation of Alliances, bad karma is good for evil races and good for the oposite.

Lizards [Neutral]
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Lizards will ask you to kill 6 slugs. (best guards for swamps worlds). One of the best choices by my opinion as they are tough and can regenerate.

Orcs [Evil]
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Orcs will ask you to raise 150 gold from plundering a province. Hero must be strong enough to ally with the Orcs, if your hero is very strong they will SUBMIT and make alliance with you for free, but you have to intimidate them first. If you allay with the orcs they will plunder neighboring provinces for you and bring you a lot of money, but make sure that you build enough happiness buildings (Tavern, Arena, etc.) or they will turn on you (rebel).

Goblins [Evil]
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The goblin will ask you to kill elves and get their ear or if your hero is strong they can join for gold. You can intimidate them to surrender the province without forming alliance, but it does not always works.

Halflings [Good]
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The Halflings will ask you to kill 15 brigands (the easiest alliance to form as there are always lots brigands on the map). If you are lucky after some leveling hafling shooters can be upgraded to have stealth which is very useful trade.

Elves [Good]
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To ally with the Elves you have to have good karma in both shard and astral if you do they will ask you to help them to rescue kidnapped elf (you must find mage tower and fight off some mage to rescue them). Success of the mission is random so if you fail just reload and try again. Elves are best low level archers in the game, but quite expensive and require good alignment to be most effective.

Centaurs [Neutral]
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Centaur will ask you to kill 5 Ogres they are hard to find (mainly on hill provinces) and even if you find them they are pretty tough to kill (user a lot of shooters). Centaurus are tier 2 units, and to be honest not the best choice on for that tier. If you are lucky and able to upgrade it to a Centaur with Bloa attacks which is great as it can entangle any unit in the game even a Dragon (makes it an easy target).

Dwarves [Good]
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Forming an alliance with them is not easy task. To begin negotiations, you need a large army, then, during a random event, acquire a random artifact from a bandits' cache, and bring it to the dwarves. You can also bribe the dwarvish lord, but this requires high level of Diplomacy and insane amounts of gold. The alliance will gets you a significant boost of the gold income and the possibility to hire Dwarvish Clan as hill provice guards.

Every race will open 3 buildings in foreign counter. The first building will allow you to recruit their unit and other 2 will give special benefit.

Buildings:
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Elvish buildings raise crystal income and improve Happiness levels in all provinces by 1.
Centaurs buildings raise both gold and crystal income.
Lizardmen buildings that raise crystal income.
Halflings buildings raise population growth rate and give you income in gold.
Orcs buildings raise income from crystal tiles and allow the recruitment of the Horde as guards.
Goblin buildings received raise income from swampy areas, but lower the citizens' Happiness.
Dwarvish buildings boost your income in mountain provinces.

Add-on: (Hero choice)

My recommendation for hero choice will be following:

1. Always go for single class hero they are much stronger than cross class heroes (limited to level 3 skills), maybe Necromancer could be an exception as he can still cast high level summon spells and they are much stronger than regular once.

2. Pick hero depending on the current scenario (forest world, swamp world, dead world and other limitations of the world). When you enter the world look around what kind of provinces you have if you have forest and hills Scout is the best choice, if you have plains Warrior is a good choice, if you have swamps and high level spells you can choose the Mage.

3. Depending on the spawn of the world you can plan in advance what hero would be more suitable:

* Scout - good for almost any shard except for heavy swamp worlds and large shards, as it won’t be a match for a high level Warrior at later point. If you plan to allay with the Centaurs, Scout will be more suitable as the Warrior and the Mage have to be very high level to take over the Ogres.

* Warrior - the best choice for large shards and plains shard, the strongest hero at high level.

* Mage - good choice for swam shards and worlds rich on crystals and poor on gold. Using a Mage requires at least level 3 spell in order to be effective.

* Commander - worst choice for any shard as it is not a much for other heroes. It can be fun on high level as it gives huge bonuses to the units but it requires tons of gold to support his army that just not worth it. Tactician class and Elves as alliance is a good match as elves become real killing machines.