You decide to meet with the Spymaster first.
In the side corridor, he leans to your ear.
"Sire, the Evalians have managed to rout the Damdamian force that tried to establish themselves in that region, causing them thousands of casualties and capturing lots of supplies and even few dozen Fireblood machines. They are currently chasing some wayward Lametanian raider groups across the countryside of their province. My agents met with these Evalian 'patriots'; they expect to be rewarded for their efforts with independence or autonomy of some sort."
"Is that all?"
He nods, and with knowledge that Damdamians lost one of their objectives, you return to the audience room and let the diplomat in along with his dozen of guards.
"Emperor Houlandin II!" He begins with angry tone. "Your father has begun, and you are continuing, an unlawful and barbaric assault upon the fatherland of our friends, Lametanians. We possess advantage both in numbers, supplies and weaponry. But the casualties are mounting, and they include the previous Emperor of Methiant. Therefore, Crown Prince Lupus Onigirus Rucus offers a treaty, which copy I've brought to you." He takes out a scroll from beneath his robes and unfolds it.
"The Emperor of Methiant will issue formal apology to the peoples of Rucus and Lametania for causing this war. Empire of Methiant will send its yearly quantity of silver and gemstones to repay the peoples of Rucus and Lametania for their lost sons and fathers. Furthermore, the province of Eval will be released from Methiantese Empire, allowing peoples of Eval to choose whether they will remain a separate nation or if they shall return to Kingdom of Lametania." He folds the scroll and looks at you.
"Crown Prince however has noted certain 'qualities' of Methiantese leaders both modern and previous, and therefore I was given the right to negotiate on the Prince's behalf."
You decide to...
A) Accept all these conditions, as they're somewhat generous.
B) Attempt to negotiate some better deal. After all, they expect us to!
C) Throw the insolent diplomat into the dungeon and resume the war.