What did the Federation get out of the Treaty of Algeron? They ceded a massive tactical advantage to the Romulans, so it must have been worth their while. Unless the Romulans were negotiating from a position of great strength, and could virtually dictate terms...
It's not clear from cannon. The Treaty of Algeron was signed after the Tomed Incident of 2311. There are a couple of novels about the events surrounding the Tomed Incident, but nothing's ever talked about on screen. What's known from episodes like "The Pegasus" is that the treaty has helped maintain a fragile peace between the Federation and the Romulans for several decades.
You might be onto something in saying that the Romulans had all the power in the negotiations. Depending on what happened, maybe the Federation had no choice but to allow the Romulans to keep their cloaking technology and abide by whatever terms were laid out for them, no matter how unfair or lopsided they might have been.