Age of Civilizations Wiki
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Release a Vassal is a button with a white dove. Essentially, when you press it, you can select a part of your annexed territory, and either establish a nation again u once invaded as a vassal, or forming an entirely new nation. When you do either of those, the nation will become a vassal.

This is a good button because you immediatly get good relations with the vassal, so no fear of independence. Plus, vassal tax can pay up for war expenses, and you can very easily demand annexation afterwords.

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