Will you yield the city?

Before I surrender it, I would burn it to the ground!

Kingdom Of Heaven - Saladin last scene ! http://www.youtube.com/watch?v=1PMjG3xF2ts

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Well, at least for settlement sieges. Perhaps remove the "raise the flag technique" and then return to the capture the city square technique but also include surrendering the settlement as an option.
When surrender is considered diplomacy could determine the price of surrender.

If the raise the flag technique is gutted, then something better should replace it...