Errrrr, they were supposed to fix that back when 1.0.7 came out. I told them it was still showing peace, but they said it was only a visual bug, but I guess we now know that was false. :-(
Well, it's always possible it IS just a visual bug that didn't get fixed yet. I hadn't quite gotten to the point on Atargatis of actually trying to trade with anyone (same on the new server).