רשי states that Balak was a prince of Midian and that he was appointed the king of Moab only after they became frightened of the בני ישראל. Rabbi Sorotzkin, in אזנים לתורה (Insights to Torah), states that he approached the elders of Moab and first scared them with the report that the destruction of the nations around Moab would actually lead to the downfall of Moab itself. The Moabites could have realized that they were "protected" in the same way that Ammon and Edom had been "protected". That is G0d commanded the בני ישראל not to go to war with those nations because of the fact that they were descended from Lot and Esav. However, Balak compared the situation to כלחך השור (Like an ox "licking up the grass") in the entire surroundings. This would mean that the Moabites would lose all their trading partners which would cause the economy to crash. The Moabites accepted this argument and used it when they approached the Midianites. This meant that they were saying that the Midianites would be destroyed just as the Amorites had been.
Rabbi Sorotzkin states that Balak came up with a plan to avoid this fate. As part of his becoming king of Moab, he arranged that Moab and Midian would create a political union similar to the U.A.R. (United Arab Republic) that Nasser set up with Syria from 1958 - 1961. The argument was that the conquest of the Amorites showed that G0d acknowledged the current political boundaries so that when Sichon conquered part of Moab, the בני ישראל were then allowed to conquer the territory that he had taken from Moab. Similarly, Midian would now be part of Moab and therefore immune from direct attack. The elders of Midian went with the elders of Moab to Bil'am in order to set this up officially. That is why (according to Rabbi Sorotzkin) the elders of Midian do not appear explicitly after the initial meeting. This was the equivalent of the acceptance by the United Nations of the U.A.R. in 1958.
Once Bil'am failed to curse the Jews, the Moabites realized (from the "prophecy" of the end of days) that they really did not have anything to worry about and the political union fell apart. That is why (according to Rabbi Sorotzkin) the Abarbanel states that the "Moabite women" that caused all the trouble were actually Midianite women in disguise. It is also the reason that when the plan appeared to be succeeding, the "Midianite woman" appears in 25:6. As a noble woman she would not lower herself to be in disguise nor could she hide her origin and status. Rabbi Sorotzkin states that even though they went along with the political sham, the Midianites hated the Moabites and wanted the blame for the immorality to fall on them. Indeed, they probably thought that if the ploy did not work, the בני ישראל would blame the Moabites and either attack them or obey G0d's original decree and leave them alone. If they attacked, they would either be punished for disobeying G0d's command or would destroy the Moabites (or both). This would place the Midianites into a win-win situation. One or both of their enemies would now be destroyed. The Midianites also still attempted to use the "argument" that they were now Moabites, but G0d could not be fooled which is why He commanded the בני ישראל to go to war with the Midianites, while not mentioning the Moabites at all.