Recently I have seen two instances of morale manipulation that are perfectly legal by the rules but which give unintended (I'm sure) results:
1. A country declared war on almost every country in the game on day 1 just to give everyone but his friends a 5% morale hit. He never made any attacks, apparently didn't move any units, but kept logging in to the game to preserve the war status with everyone. This lasted until his country was obliterated by several nearby who didn't like the tactic.
2. Two countries who were beat convinced others to transfer them a territory across the world, secure within an opposing coalition so that their conqueror would never be able to eliminate the 5% morale penalty for still being at war with them. Again, they log in every day to preserve the morale hit on their erstwhile enemy.

I have seen debate over the merits of declaring war in advance of conflict vs surprise attack, but this is an obvious manipulation of the war declaration mechanic, both in it's initiation and continuation past reason. Perhaps a fix would be for the 5% war penalty to not begin with war declaration but instead with the commencement of actual combat. Similarly, if a certain amount of time passed without combat the 5% penalty should stop until/if combat resumes. This would require disconnecting the morale penalty from the political status and basing it instead on combat.

My problem is not with a government in exile remaining defiant - let them continue to resist. It is with the effect of that defiance. The 5% morale reduction is meant to simulate war weariness - which is, bluntly, the continual drain and strain of blood and treasure. Once a country has lost it's territory that drain stops. If there is guerilla resistance it does not rise to the same level as the open battle beforehand. An example of this is Germany after WWII when guerilla activities persisted for some time after defeat of the official government and military. Yes, it requires effort to put down the guerilla resistance but it is in no way comparable to the war effort mounted beforehand - AND - it did not prevent the immediate change to the Allies in drawing down their forces and turning their attention to civil and economic things.

Plus, if we want realism (as much as we can without making a game unplayable) it is not remotely realistic that while the subjugated people of a country accepted their lot another group entirely on the other side of the world would suddenly rise up and declare themselves as one with the defeated country and proclaim such resistance. A government in exile is a very small amount of people compared to the population of whatever country, province, or territory is hosting them. The french government in exile did not make London become a french territory. The morale effect a government in exile has is a positive one on their own people but is pretty much irrelevant to their conquerors.

So, to reiterate, I'm not suggesting rule changes to prevent exchanging territory but instead to base the 5% morale reduction on combat instead of political stance. If the resistance is able to inflict real damage (i.e. combat) then by all means let the morale reduction continue. But if they can't, the conquering people are not going to lose morale - instead they will gain it because the war is effectively over.

Again, bloozer, I have no objection to continued resistance. If a player has units or can obtain them then by all means let him. Partisan resistance is simulated in this game by revolt possibility and/or actual units such as militia. I have no problem with that.

But when the South Indians (just to use a random example) are conquered, the revolts have been put down, their former provinces are now stable enough to not revolt (meaning partisan activity has effectively ceased), and they have no units nor the capability to get any, then it is ridiculous if suddenly a province in, say, Peru suddenly says "Hey! We're South Indian now! We have no army, no navy, no air force - our former citizens are no longer even wanting to continue fighting - but we still maintain that the war is NOT over! And you can't do anything about it because we are in the middle of Peru, who protects us, who isn't at war with you but is happy to tick you off. We can't do anything either, but since we are no longer Peruvians ourselves, your people must remain disgruntled with the war and refuse to support you any more."

Yes, I've seen Schindler's List. Yes, I understand about partisan activity and how France had a government in exile, with allies still fighting, whose eventual victory included them. None of that is simulated in the scenario I described. It's just an exploitation of a rule to achieve an unintended (and irrational) result.

BMFox - in the two instances I originally described, the player who declared war on 85% of the world on day one may have joined simply to help someone else, or maybe just felt like being a jerk, who knows? He was taken out fairly quickly anyway.

The second instance was a player who fought hard for himself originally, but when he was almost dead found a loophole to exploit and a willing accomplice, just because he was mad at losing. So what's to report? A player got mad and used a rule in an unanticipated way? My suggestion is not to bring about a fix for my specific game, but to improve the game for the future. I believe this is the correct place to post such? A suggestion about how the game can be improved?

With all due respect, OneNutSquirrel, that's baloney. Rules exist to control what can and cannot be done. Punishment after the fact, which will inevitably be slow, late, clumsy, ham-handed and misdirected cannot solve the problem. Remove the game from rated games? That punishes everybody. Ban the player? For what? Declaring war on others? Ban those who benefited? That's everyone he didn't declare war on, who most likely had nothing to do with it - in the particular instance I saw I benefited but had no connection to him whatsoever. Shoot everyone and let God sort it out? That's what your solution sounds like.

Better (since this is a suggestion to improve the game) to make sound rule changes. Disconnecting the "war weariness" effect from the political stance would solve the problem.