The Gnomes are a separate group. They clearly have their own laws, activities, and such.
Remember, that following the God Wars, the Gnomes (much like the Dwarves ... and the Cave Goblins), they retreated from the rest of the world. Only coming out in recent decades.
The case with Khazard, the Mahjarrat has always been active. However, the political climate in Kandarin was perfect for him to gain a major foothold.
King Ulthas dies, splitting the city between Tyras and Lathas.
Tyras bails to go explore the Elven territory and gets bogged down in a war there. He leaves a drunk to run the half of the city.
Lathas, between his dealings with the Elves (mourners) and keeping Iban contained, his focus is diverted away from other issues.
Khazard is simply able to gather a large following and take over large stretches of land.
The leaders of Kandarin are no longer in a position to militarily oust Khazard's Army (at least not without taking
massive
casualties on their own). Especially when Lathas felt the need to "protect" the city from whatever lies in the Underground Pass.
Their relations with the Gnomes was probably weak. Officially, Lathas probably was against Khazard, but we have no proof he was against him either.
It's possible that Lathas figured the Gnomes would win the protracted war thus solving 2 problems at once (remove Khazard, and weaken the gnomes enough so they wouldn't be a military threat).
By doing nothing, he didn't provoke Khazard into preemptively attacking the city, creating a situation where Ardougne might lose the fight or lost too many troops to defend against threats of the Underground Pass.
Keep in mind that their hopes were partially answered when the player char technically ousted Khazard, some of his troops and leadership (Gnome Quests, Fight Arena)
It's just no one could have predicted that Khazard would
come back
because of what he really was.
09-Nov-2017 23:59:21