War and Peace Questions

[monniker]

Hello and good afternoon!

I've been trying to figure out the pros/cons of annexation. To whit: I once played a long term Spain game against the AI. Rather than ever suing for peace with my enemies- a la Portugal and the US, I simply continue to be at war with them while holding their territories. By placing occupiers with that special rule that increases loyalty, I still seem to benefit from increased production rates from the held territories, and I seem to have effectively annexed them without ever formally doing so.

Am I in fact mistaken? Has my production not increased due to that but due to rising national morale and therefore I have fooled myself into thinking I have been gaining from my conquests?

Or can I just effectively destroy lesser opponents and take their stuff, denying them the chance to rebuild enough to hurt me?

Thanks for any feedback!
monniker

[Caoster]

No, that's pretty much how it works. The diplomacy in this game is shit. I play as Prussia, and I steam roll Mecklenburg, yet for some reason I cannot annex them. I can take all of their territory except their capital, but I can't annex them. So I don't. I use develop territory to increase my loyalty, and just stay at war with them. Plus if I make peace, I would have to give back Mecklenburg, and I'd probably take a moral hit or something else stupid.