<PERSON> knew that without a Great Ring of his own he was no match, power against power, for even a Ring-less <PERSON>. But he had concluded that the West no longer had any hope of resisting <PERSON>. If he could not defeat <PERSON> himself by making his own Great Ring or (better yet) finding <PERSON>'s, then he thought the smart thing was to become <PERSON>'s ally -- with the long-term plan of using his own ability to persuade and manipulate to become the power behind <PERSON>'s throne. As <PERSON> said to <PERSON>,
"A new Power is rising. Against it the old allies and policies will not avail us at all. There is no hope left in Elves or dying Numenor. This then is one choice before you, before us. We may join with that Power. ... 381
As the Power grows, its proved friends will also grow; and the Wise, such as you and I, may with patience come at last to direct its courses, to control it." -- from "The Council of Elrond", The Fellowship of the Ring
Whether <PERSON> was really capable of pulling that off, as he believed he could, is another story. But at the least, that policy would have bought him time to continue his efforts to make his own Great Ring and/or locate the One Ring.
<PERSON>, for his part, was merely following his usual policy of dividing his enemies. One of the Elves of Lothlorien remarks, "Indeed in nothing is the power of the Dark Lord more clearly shown than in the estrangement that divides all those who still oppose him." The original distribution of the Rings to the Dwarf lords and to Men was another example of the same general divide-and-conquer policy.
<PERSON> suggested that <PERSON> used both promises and threats when dealing with <PERSON> through the Palantiri: "he [<PERSON>] has been persuaded from afar, and daunted when persuasion would not serve." ("The Palantir", The Two Towers).
Not that <PERSON>'s promises ever worked out well for anybody but him. <PERSON> bargained with <PERSON> to reveal <PERSON>'s hidden camp if he could be re-united with his wife <PERSON>:
Then <PERSON> smiled, saying: "That is a small price for so great a treachery. So shall it surely be. Say on!" Now <PERSON> would have drawn back, but daunted by the eyes of <PERSON> he told at last all that he would know. Then <PERSON> laughed; and he mocked <PERSON>, and revealed to him that he had seen only a phantom devised by wizardry to entrap him; for <PERSON> was dead. "Nonetheless I will grant thy prayer," said <PERSON>; "and thou shalt go to <PERSON> and be set free of my service." Then he put him cruelly to death. -- "The Tale of Beren and Luthien", from The Silmarillion 381