After several battles against outrageous odds, finally a "fair" fight between just one Caliph. As soon as we spawn on the map though, we realize that despite for a small bit of farmland, a tiny patch of iron and a few trees, we are completely cut off from anything good by a natural rock wall that spans all the lush woods and farmland, as well as the rich quarry on the map. In order to win this one we'll have to rely on a more unconventional economy.
Once you place your Trading Post, Stockpile, and Granary (set to half rations until we get some food going), buy 5 bows, crossbows, and leather armor and recruit both groups. There are a few lions just south of your keep, so kill them off. Then we're going to have to protect our lands and screw with the Caliph at the same time.
Build a sentry tower on your side of the rock wall, just north of your trees and the Caliph's quarry. Build some stairs and send your archers up there to start consistently killing off the quarry and mine workers. The Caliph will send bowmen against you which will whittle your guys down, but for now that's all you can do. Meanwhile, set another sentry tower as northeast as you can, nearby your little patch of iron. Once your stairs are set up, send your crossbowmen up and then destroy the bottom stair step. The Caliph will frequently send small groups of swordsmen to harass you, but with this defense your crossbows will cut through them, and the swordsmen cannot reach them to slay them.
To set up our crappy economy, build two wheat farms on your sparse farmland provided, and a single mill once the wheat comes in (one mill is all you will need this whole game) with a few bakeries. Place a few woodcutters at your southern trees (your archers will cover them) as well as at the trees to the northeast. I also placed a woodcutter to chop down the tree at our little farmland to try to squeeze in a third farm but I forgot to test whether a third farm is possible; I suspect not.
Build a few hunter's posts for food variety, as well as to keep you afloat while you wait for wheat to turn into bread. They will get picked off by Caliph's men from time to time, but they are a blessing for the most part. Finally, carefully squeeze in three iron mines onto your little patch of iron and you're set.
At this point your economy is basically as good as it's going to get. Pretty pathetic, right? The only truly renewable resource you have is bread and iron...maybe wood if you rest your woodcutters ever now and then. Even so, it's not a lot, so you'll need to make do. Add to this the fact that in the early-mid game Caliph will slowly start killing your archers and send slaves to burn down your iron mines, and you're not in for a fun time. Here is what I did.
Sell the iron that comes in and use the resulting gold to build fletchers. We'll need some bows to fight off the Caliph's forces; we also need to turn our wood into something more valuable before we sell it. Once you have the bows (or you buy some in if your archers keep dying), build a second sentry tower right by your first and reinforce it. Once you have about ten archers firing onto the quarries, mines, and hostile archers you shouldn't need to reinforce them often. I also recommend five archers to stand next to your crossbow tower. The Caliph will send waves of slaves to burn down your iron mines, and while your crossbows do a lot of damage which is good against swordsmen, their fire rate is horrible against fast swarming slaves.
At this point you have more regular bows than you're going to need. I built a few more fletchers, turning all of them over to crossbows (which sell for more than regular bows), I also built as many blacksmiths as my iron mines could keep up with (I used only blacksmiths because I favor macemen; if you favor swordsmen you could use blacksmiths and armorers both). For now I am just selling anything that they produce, maces, swords, or plate mail sell for 30 gold apiece; more than raw iron alone. At this point I realized my little economy wasn't going far and I wasn't hurting Caliph beyond his stone and iron production, so I had to kick things up a notch.
Your food should probably be at full rations by now; build some more bakeries if you have a lot of flour in the stockpile. At that point we'll be getting +1 popularity from two food groups, and +1 from no taxes. Time to put that morale to use. Since the Caliph sends out crappy strike forces that are easily repelled, we can afford a hit to our combat efficacy. Build enough Bad Things (I prefer gallows as they take up little room) for a -2 popularity and +20% worker efficiency. You should be hovering at 0 popularity change. Later I would find out this boost in working speed allowed my farm people to fill up the granary and go up to increased, and eventually (once I built enough bakeries to pace the mill) double rations. You can choose to wait until you have good food stores or charge right ahead. In any case, eventually if you don't go crazy on building hovels you should have more than enough food for double rations, giving you a total of +9 popularity. I put down Bad Things until I got the -5 penalty (and +50% worker efficiency) and put on -4 in taxes. This will even out your popularity (it might dip if you run out of meat; it might increase if you decide to build churches, or buy in hops and use inns). Sell your excess crossbows and metal weapons (never sell raw iron; if you have a lot build more blacksmiths/armorers), and if you run out of wood don't be afraid to buy in wood at large quantities; crossbows sell for a lot more than wood is bought for.
How you choose to finally defeat the Caliph is up to you. Your combat malus due to your Fear Factor won't be so big you can't defend yourself, BUT you don't want it burdening you down once it's show time. Once you've built up enough troops that you believe can take on the Caliph in one go (for me at least six trebuchets and 100 macemen) you want to destroy ALL of your Bad Things to eliminate your -50% combat rating. In fact, you may even wish to build several Good Things (note that flags do not count towards Good Things) to gain a positive combat bonus while slowing down your economy. Adjust granary rations and taxes as appropriate and take him down. I personally built a couple fire ballista on my side of the wall to burn down a few farms. Meanwhile I built several trebuchets JUST out of reach of his sentry towers and as soon as one of his towers fell my macemen swarmed in to kill him.