he is smart indeed, refusing to be a vassal is the best choice, this is a small country, being squashed by bigger nations, being linked to the lord or lord relatives is super dangerous, specially to close vassals, being free means to be able to cross to any country depending on the war progress, not being linked to a noble means less compromise, in short, he can be affiliated to any country on the future, because he is smart, even on a non privileged position he is probably able to predict the outcome of any war, he would chose to live on the winner territory even before the battle begins.