Now I know I'm just a Nausicaan. And so I'm still not completely versed in the intricacies of diplomatic relations that the empire engages in. But I have served the empire faithfully all the way through to some sort of General rank. So I'm going to say what I have to say on the prospect of halting official hostilities with the federation.
For me it boils down to the enemy of my enemy is ... well not my friend. But useful?
The Undine. The Fe ... Fe ... annoying demonspawn. The Iconians. The Romulans.
The empire is fighting a war on many fronts. I find it useful to put the federation in the line of fire allowing us to outflank the Undine.
But obviously the federation would need to pay reparations to the empire for its utter failure in the Undine conflict. Honor, and the Defense Force's coffers, demand as much.
Now someone pass the bloodwine. While I go ask that Hyou-MAHN if he plays Dom-JOT!