In BfW 1.11.7, the AI gets passive if it is surrounded, and won't attack when retaliation possible, no matter how feeble.
In first scenario of HttT (so, no UMC pollution), create a Yeti and give to side 2. Surround on six sides with some crappy unit with melee attack, like a bat. Leave the bats as side 1. End turn. Yeti does nothing. Next time, move one of the bats. Now the Yeti will move, then attack.
If you had used a fire dragon instead of a yeti, the AI would have used fireballs on the bats. If you had used something with ranged & melee attacks, instead of bats, the AI dragon wouldn't do anything when surrounded.
Reported in Gna: http://gna.org/bugs/index.php?21334