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I had a game when the Allies took Rome and Italy surrendered, a few turns past and the Axis retook Rome and I saw a few Italian units appearing some turns later, then the Allies took Rome again and the Italians surrender again (and I think their units were removed too). Is this WAD?

I saw the same thing in the three games I've played so far. This looked like an accidental "Feature" that needs to be corrected in a patch. I actually think Italy should not surrender until Rome falls based on how the game mechanics currently work. Either that or Italy surrenders and any territory not already occupied by the Allies goes to the Germans. It does not make sense that Italy territory goes Allied 100% on surrender.

The current mechanics did teach me to keep a few units back from the front lines when I suspect Italy is ready to surrender so I can quickly transport them to Rome and other key northern port cities (including Albania and Greece if it went Italy) to stop Axis from taking them easily. I found that US Garrison units work well for this since they are cheap to purchase and transport and can be kept on a nearby port ready to go. UK garrisons also work, but it is more difficult to purchase them since my MPPs usually need to go somewhere else more important.

You can also game the system by keeping a lot of units back and when Italy surrenders, immediately move them to Northern Italy and the Balkans and walk right into Germany from the south without the need for a D-DAY invasion. The AI does not seem to be able to cope with the Italian surrender and does not defend the southern border of Germany because it is still looking for D-Day to occur. I was in southern Germany in late '43 in one game before winter hit and forced me to stop to let the rest of my forces catch up for a spring offensive to Berlin by July '44.

I strongly suspect game balance is going to be adjusted in future patches to make these moves more difficult to execute.

Malor