As I've played through twilight of arnor I've found that some AI's are purposely screwing themselves over. They don't try to colonise more then like 3-4 planets they don't build upa military they just let themselves be crushed.
There seems to be a race that does this in every game I play. I play on only immense maps and in those games there is always one race that does this but the thing is, they pourposefuly do this. Meaning theres nothing to hold them back theres no one's attacking them they have lots of colonizable planets in their sector but they just don't DO anything.
I have the difficulty set on normal if that makes a difference.