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It is clear to me that it is critical to USSR defense to see to the destruction of city rail hubs. I have tried defending with static units, inf units, heavy inf units, and leaving nothing on cities. When the Germans occupy, leaving nothing generally results in an intact rail hub, but it rarely does not. Use of other units is mixed. What is the recommendation as to which size unit to leave as a garrison for the Axis to attack that results in the most destruction of the rail hub?

Excellent question. I've wondered as well.

The effect of scorched earth is not affected by the unit (if any) that was on the resource before it was lost.

However, a stubborn defence may see the resource strength reduce due to the besieging mechanism, especially if it is cut off before it is taken, which will actually hinder Axis supply more in the next few turns.

The downside being that you will be less likely to be able to buy the defending unit back at reduced cost.

Bill,
Quick, concise answer as usual.
Your answer caused me to look in the manual para 5.13.3. Damage to Resources (what I should have done first.) Your answer is better as it points out the downside and gets to my question about units. I think I found a typo: "Any resource except for a Capital of Fortress." Isn't the "of" supposed to be "or?"

I want to sum up: 1. USSR's scorched earth policy is embedded in basic WiE and is not something that a player chooses. This policy can be modified by the editor. Consequently, USSR cities, when occupied by the Axis, will be degraded 0 to (3?) points.
2. For cites that are defended, the supply is reduced by arty, medium bombers, and surrounding.
3. Surrounded units with less than 5 supply don't come back "early." Reducing the city to zero, making it easier to kill the unit inside, also reduces the rail hub.

Not quite.

If a city is surrounded, it immediately reduces to a 3.
Units lost while in supply 5 or higher can be purchased back at half price.
Having two units next to a city reduced the value of the city by 1 point per turn.
(Except for Capitals, Fortresses and Secondary Supply sources, I think.)
(They may degrade 1 per turn if in close siege.)

The AI defends all cities within reach of enemy units. So one strategy against Russian AI is to chose a main supply line and overrun those cities to help with supply, but elsewhere let the Russians occupy the city, surround them, then either take them out or use garrisons to bring the 3 city down to 0 and then starve the garrison. At about half strength the garrisons can effectively attack. This can help slow down the endless replenishment of new Soviet Corps.

The other supply trick is to use the chaining of HQ. (Do you know that one?)

(If you really want to mess with the German AI, put a UK airborne right behind Strasbourg and watch the AI plop 6 units in the reachable cities (Sometimes even armor). Then just leave it there and it negates those six units. The more Long Range Air you get, the fewer German units you need to fight on the front line. Naturally that's not going to work as well against a real opponent but, frankly, it makes it too easy anyway. Still try it once, its a hoot.)