No it's not. It's so broken and exploitable that you have to go out of your way to NOT take advantage of it.
Well, let's compare the EU III-AI with the AI of a blockbuster like CIV V:
Diplomatic AI: In EU III, the AI tries to get alliances which will help it. You can hardly ally to anyone halfaround the globe, nor would any country ally with someone much weaker. In Civ V, I have not yet discovered a pattern in the alliances.
Strategic AI: The EU III is extremly opportunistic. If the rival is already at war with someone else or seen as weak for other reason, it declares war. In Civ V on the other hand, the AI seems not to take into account that the large empire nearby which threatens its existence is already engaged at different fronts, so an attack would be very efficient now. On the other hand, you sometimes recieve a declaration of war from someone at the other end of the world who is already in trouble.
Tactical AI: The AI tries to crush the enemie's main armies and after that starts to siege every province. Since DW it even tries to avoid to take too much attrition. In Civ V on the other hand, the AI loves to shuffle around its troops, just in range of the distance units of the enemy. I never really fear an attack on a city by the AI in CIV V - You have to try very hard to lose a city.
Of course, humans still find ways to exploit the AI, for sure. But: Not everyone is such a crack and knows every exploit, and experienced players often avoid the most gamiest exploits.
Still, compared to other major titles, the AI is very strong - in a much complex game. Sure, you can always make it better, but before telling the AI is crap you should compare it to the "industrial standard".