I think they can be trusted to act in their best self-interest and this deal is that.
It allows them to:
- Stop the trickle of casualties.
- Gain back most of the lost territory.
- Regroup to potentially take the city back later. (Of course they would stand no chance but obviously they would think differently)
- Win public support.
- Have a sink for the more radical people in the populous. (Wanna live in anarchy? Go over there!)
I expanded on the scenario in the other comment in this thread. But what If you wouldn’t have a choice? If it's between fighting to the last person or taking the deal?
I would rather compromise and trust that the spirit that started this is strong enough to withstand any future attacks. With this time you have the opportunity to build up your defences, reach out to the people in the state and build networks that will keep you safe in case they attack again.