Diplomatic Bonus for Shared Culture.

Using pirates is bad for your rep... I use them all the time.
Yeah, Hidden Nationality units might not cause war, but that doesn't mean that the AI doesn't know exactly who's running them.

Works the other way as well, though: if you've ever noticed your Foreign Advisor telling you "Don't forget, the XXX have attacked us before. I don't think we should trust them" when 'XXX' is a Civ you've never fought a war with, that means that the XXX have hit you with their HN units.

Spoiler :
You see this quite often in the Sengoku scenario, due to the AI's use of Ronin/Ninja, and in CCM because of the Enslavers; but also in the epic game, if you've been playing mostly peaceful builder.

That happened to me in my current game (as the Australians) on @LKendter's Earth-map: my Foreign Advisor started warning me about the Indians in the early Industrial, despite Gandhi having been a staunch trading-partner for almost the entirety of the game to that point, and constant ally (against the Persians and later the Mongols). This was almost certainly due to his owning some/all of the multiple Privateers harassing (my) shipping throughout the Indonesian archipelago; I saw more than one of them sailing into/out of Indian port-towns (my Frigates and Privateers also sank/captured many of them).

I got my revenge, though: once the Mongols were down, that left me with a whole pile of Cavalry, Infantry and later Tanks (plus a large pile of captured/upgraded Artillery) sitting in East Asia with nothing to do. So I invaded China for their Luxes, and took almost all their mainland towns (the Persians got a couple too), consolidating my hold on the region. Then towards the end of that campaign, Gandhi declared on me when I told him to get off my land, which was a mistake I didn't allow him to recover from. And I tied my PT with Mao (needed due to WW) to an MA against Gandhi, so after I recruited the Argentinians to grab his last town (which was over in Hawaii), the Chinese ended up back at war with me, and are now also about to lose their last town as well (in the Cook Islands) :evil:
 
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Does the piracy penalty apply to using privateers against an enemy?
Depends what you mean by 'enemy' here, but I would guess so.
+1 to +3 for using privateers (the victim adds on the penalty).
Assuming you mean 'Civ you are currently at war with', then I would guess that your victim's attitude would still worsen from every Privateer attack (plus whatever penalty you get from sinking their ships, if your Privateer wins), but the other Civs wouldn't care, unless...
-1 to -3 for each enemy unit (of common enemies) you destroy
If you mean 'enemy of Civ you are currently at peace with', then I would guess that the friendly Civ would 'know' that the Privateers were yours, and thus their attitude to you would improve (up to the maximum cap) for any enemy ships sunk/captured by your pirate fleet.
 
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