Blame the Drow for that. They assassinated the Moderate King framed his heir Lorgru, and helped put a warmongering puppet on the throne. When the Warmonger was defeated and the Heir returned the Dwarves angry and refused to allow Lorgru to set up again and restart trade. Forcing him to give up a lot of his land and most of their progress. But Many Arrows is not destroyed and is still on the map.
Ironically the chain of events leading to this end was partially set off by Lorgru being a generous moderate. He and a squad had captured an Elf who had been trespassing on Many Arrows Land and had slain orcs in her defense. She was also one of the main leaders of the neighboring Moon Elves. Lorgru released her as a gesture of good will (and in exchange for a public and formal apology to Many Arrows.) which angered a lot of the more aggressive and war wanting orcs for not just killing the hated elf.