Afraid this is going to be another one of my "longshot specials", in that I only remember a bit about the tale.
The setting takes place on an alien world, with a three-man team of humans meeting with a leader of the aliens. I believe the aliens are rather technologically backwards compared to the humans, but I am not sure about that. I believe they are man-like humanoids. I do recall the make up of the human team. There is a junior officer/member of the team, a more senior/seasoned officer, and the leader. IIRC, the leader cuts a rather dashing, alpha-male figure and personality.
The men meet with the alien leader in a hut or yurt of some sort. I do not recall the reason for the meeting. I think it is a sort of "first contact", but cannot be sure if there were other reasons (e.g. wanting a cultural exchange, trade, etc.) From the beginning, the commander of the human mission dominates the negotiations. He challenges the alien leader, calling him out when the alien tries to be deceptive or cunning, and becoming aggressive when the alien leader resorts to bluster and threats.
Near the end of negotiations, the alien leader, apparently cowed by the human mission commander, offers drinks to the human team in friendship for a new accord (something like that). The human commander, realizing the drinks are poisoned, knocks it out of the alien leader's hand, and I think he pulls out a weapon (ray gun or what have you). I'm not sure if that ends the negotiations with capitulation by the alien leader, or if they are simply held at bay while the team extracts itself from the alien village.
The story closes with the three men heading back for their ship. The junior-most team member praises the commander for how well he handled the mission. The commander agrees heartily, and the senior officer tells the junior one to shut up. The junior officer asks why, and the mission commander begins raving about his greatness. Something along the lines of "the fools thought they could stop me, but I was too smart for them", etc.
It is then we learn the twist. The mission commander is insane, suffering from paranoia and delusions of grandeur. The senior officer explains that their research indicated that the native alien species on this world was so inherently treacherous, so good at deception and double-dealing, only a paranoid madman could hope to deal with them successfully. The senior officer (whom I believe is revealed to be a doctor) also comments that the mission is going to set the commander's progress in the sanitarium back months, if not years.
I read this one in an anthology, and older one. I'd guess 70s or earlier. It might have appeared in an anthology containing "The Gun Without A Bang", but I cannot say that with any certainty. It just sticks in my mind I read both stories around the same time.