So I've spent a lot of time talking to various gamers who follow the 4x and grand strategy genres and trying to work out a viable way to make politics happen. Politics would include internal politics, international diplomacy, and espionage. My best model to build on was combat in strategy games.
The goal is for there to be a push and pull between sides with multiple steps for more complex actions and the potential for counter play.
The system has a few different aspects.
The first aspect is intelligence networks. Every character has an intelligence network. Provinces, states, and populations are not involved. The character can distribute funding into the network for varying purposes. The target of network activities is always another character. Generals, spies, nobles, wizards, merchants, etc.
All characters have a set of desires based on their situation. Rulers might covet the provinces of neighbors, or to gain access to resources or have wealth. Characters might desire a good marriage for their daughter. Wizards and other characters may desire to gain magical power or items. A duke might desire the throne of his country. Various stuff.
Characters also have secrets. They may be engaging in a plot or maybe a noble defiled a princess or a duchess or w/e. Basically stuff they don't want to get out because of negative consequences. One example I often use is a nation that worships dragons and draconic things where a noble captured and imprisoned a dragon and leeched its power and aspect, aspect being scales or claws or even wings and claimed the crown by divine mandate. Obviously the people and his political rivals would explode if this came out. That's an example of a very high value secret.
You learn these things through your intelligence networks. You can fulfill desires or blackmail people over secrets. Or merely promise to fulfill desires at a later date for help now. "If you help me overthrow the king I'll marry your daughter and grant you a dukedom". Stuff like that. Blackmail or desire fulfillment can also be used as an incentive. Maybe you discover a dirty secret and force a noble to become a traitor in a larger plot. Secrets and desires will have a value that affects how a person will respond to you. In theory you could be a nation of extreme espionage ability and create a plot of great complexity with 40 or more named characters to become king of a fantasy HRE or something. Note that actions are atomic. You can use independent knowledge and secrets in whatever combination you like.
Intelligence networks work in a relatively simple way. Through the use of time and resources they slowly accumulate power. There will likely be two stats. Capacity, which is purely based on funding and capability which limits what actions you can perform and gives a bonus to success. Capability measures things like understanding the culture, having a network of loyal agents, and so forth. Its primarily based on time and funding. Longer time and less funding is less likely to arouse suspicion than piling on money in a short amount of time due to scale. One experienced guy working discreetly vs trying to rush things with money. Capacity is sort of an abstraction of how many agents you can afford and what you can afford to pay for info and so forth. A high capability would allow you to slip tails on more powerful characters or get agents in cool places. Like blackmailing a chambermaid with her children.
You can target specific characters or just gather into on all characters in a province or kingdom. Targeted spying of course is more effective for specific goals and for getting really juicy secrets.
Also of note is that adjacent networks give a slight boost to each other. So if you are studying a group of provinces that are close by its more efficient. This sort of represents cultural understanding and how to act discreetly as well as overlap between areas.
Counterespionage is pretty similar to the regular kind except it has different goals. Detecting suspicious activity allows you to decide where to deploy your defensive resources. You can also figure out where you enemy is working and what he is focusing on. For instance you could capture and kill his spies and agents. This results in a decrease in his network attributes. I'm not gonna try to simulate double agents, its too tricky.
Another aspect of espionage is mere intel gathering. This requires less funding and capability than gathering personal information. Troop movements, supply lines, what kinds of buildings are being made. Stuff like that. This information can be quite valuable in war. Cutting off supplies, knowing where enemies are and so forth.
You'll also want to spy on some of your own nobles to see if they are plotting against you. Works the same as spying on other characters.
Espionage is one of many systems you'll be dealing with. It requires the same resources as other systems like industry and war and research. As a player you can choose to focus your nation where you like. You shouldn't have the resources to devote a lot of effort to espionage of every character or even several kingdoms unless that is your focus. You might rely on espionage rather than a military to defend yourself and achieve your goals. Its totally unnecessary to spend a ton of time on this system. Most AI will probably have weak or moderate espionage defense much less a powerful offense. Of course some characters might go that route.
Espionage actions are not a separate system from the rest of the game. You can use them in treaties with other characters. Treaties exist outside of war and peace in this game. Ending a war can be a part of a treaty but it could involve other things. You could blackmail someone, bribe them, and offer them magical knowledge in exchange for their knowledge of farming or for a monthly allotment of rare spices and covert military support for rebels in a third kingdom or something. Any character action or combination can be applied to any other character. Well except war declarations. You can't declare war on a merchant or something. Makes no sense.
As far as the feedback part of the title I have a few questions. Am I missing something? Can the system be improved? Is there something very unclear in what I wrote? Maybe the two variables for networks are bad or another one is needed?