Right. Because a fully developed duchy - something we do not even have in thal - is exactly the same as a duchy deliberately and maliciously stripped bare and made to starve. Around the negotiations table, such a duchy is in fact worth exactly as much as the other. 
The state they're in now would've been the state we would've taken the regions in through a war that would've devastated many more of Melhed. Signing peace was thus the smart move for them compared to all the stubborn idiots who drool at the thought of a "heroic last stand" and the smart move for us, compared to all the stubborn idiots who orgasm at the thought of crushing that last "heroic" stand. Yet for us now, the result wouldn't have been so different except that we'd have had to fight an enjoyable war a little longer.
If there's starvation, it's damage is minimal. Melhed could have damaged those regions a hell of a lot more. I'm also pretty sure the starvation is probably mostly accidental, with all of your armies and region revolts, plus some of the bugs, keeping regions fed has been quite troublesome...
Poll