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!)