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Right, then you own the capital but it has unrest right?
so the entire part you are talking about, 'cede' is only discussing giving up claim to the city. If they do not 'cede' it is in dispute (hence unrest). It is not actually talking about possession of the city.
You need to give the city itself.
Ceding the city to you means they give up their claim. If you don't want to keep it, you have to actually return it. If you don't return it and they don't cede it, you keep the city, but there are production penalties because it's still considered an "occupied" city rather than your city.
I'm still confused on a second point, though. After I took possession of Washington in a game today, I was unable to return it to America, or to grant it to anyone else, in later negotiations. It showed up on the list, but clicking on it wouldn't put it on the negotiating table, unlike the other cities.
Might this be a new bug/feature introduced by the recent patch? I seem to remember being able to do this before, though it's admittedly not something I messed around with much.
You can't trade capitals bc they are a victory condition (?) is my guess. Only between the original owner to return it. At least, that is how it seems to be now. Maybe to keep 2 humans from taking stuff, giving all to 1 and letting him win as a "team" ?
I'm surprised you didn't know you can't give an original capital back...there,s no way to give it back past the peace treaty, you CANNOT, trade a capital city.
And while I consider it a bug, I can understand why a city is no longer occupied after a war anyway. But that leaves ceding in an odd place. So either ceding should get some other effects that help with warmonger modifier for example, or how fast other civ's will denounce you for it, or completely removed. Because currently it's just confusing and not interesting.
If your opponent don't cede the city, you can't trade it, while capitals can't be traded by default. That's all cede do, you ask for the AI to cede if you want to trade it later. It also give you more warmonger penalty. You read it right, more, not less. If you're trying to avoid warmonger penalty, don't ask for the AI to cede. Then there's a -18 permanent "Occupy one of their cities" penalty with your opponent and a smaller "Occupy one of their friends city" penalty (I don't recall how much. It's -6 or -9) with his friends. You would think this penalty is related to the cede mechanic, right? Nope, it doesn't matter if they cede the city or not, if you capture and keep a city you get this penalty. Then come the weirdest part that make you wonder what is the point of this mechanic. If you return a city to the enemy, just one city, doesn't matter how much cities you captured, the "occupy a city" penalty is removed. The city doesn't need to be theirs, it can be one of your original cities or a city you captured from another civ. You can give it in the peace deal or in a normal trade exchange while at peace, it doesn't matter, you just need to give them one city and the penalty is gone.
So yeah, don't ask the AI to cede unless you want to trade the city later and always give a city back to the AI after a war. I sidetracked from OP question, sorry about that, I just wanted to make it clear what the cede mechanic actually do.