Generally, Red Dragons are known for their terrible temper, favoring slaughter and destruction above all else. However, the Red Dragon ruling Watchtower Port is rumored to be exceptionally tolerant. As long as one submits to it, everything is negotiable. Even those Elves who had offended it in the past are still living well now.
After learning that the Kraken had failed, the Sahuagin Baron had considered submitting to the Red Dragon. The problem was that they had once promised the Red Dragon not to attack ships under its protection, but they broke that promise when the Kraken appeared. Back then, who could have expected the Kraken wouldn't be a match for that Red Dragon...
Betrayers are unlikely to regain trust. Instead, pretending ignorance seemed like the safer option—burying one's head in the sand as if nothing had happened. Naturally, the Red Dragon was extraordinarily vindictive, and even after several months, it still remembered the Sahuagins' attack on its protected ships.
