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I'm the Soviet Union being invaded by the Axis powers and I just noticed some of my units keep disappearing during battle, without any strength decrease inbetween? I don't have fight to the death option on, but I do have scorched earth on, but that shouldn't kill my units! Plus, they're not surrounded.
I have the same problem, also as Soviet Union, and according to this thread lots of others share that experience.
It seems to be related to supply issues, but I still think it's a bug that almost full strength units vanish instantly without being overrun/encircled.
