A few points:
- the massive city bombing wasn't what diverted Lutwaffe attention from the front. It was the city bombing at all that did it.
- remember that also allies suffered from city bombings. It's not just a war crime carried out by the allies.
- it's possible that the massive city bombings from the allies after 1944 (and at the very least the city bombings in 1945 shortly before surrender) delayed German surrender, because it scared German leadership that the surrender wouldn't be met with mercy. It helped those nazis that were punished in the Nurnberg trials convince low-level commanders and regular privates that the allies would show no mercy on surrender even to low level commanders and privates, something that made it more difficult to obtain massive local surrenders, desertions and mutinies before the official surrender. However this is not certain.
- the effectiveness of hurting economy that many thought that city bombing gave is way overestimated. Economy was weakened more by losses in equipment at the front. Also - in hot war resources temporarily become more important than money until after the ceasefire. Money is a strategic weapon used to acquire a strong army before a war, not something that matters much in actual war (at least not in a total war like ww2). Weakening the economy of an opponent in a war is not necessarily that useful. Bombing logistical keypoints such as railway stations, bridges, and factories for military equipment is more useful. In fact, lack of money isn't that much of a problem for a nation at war - just look at the Lend Lease treaty that Great Britain could get even though they were getting economical problems due to Luftwaffe bombings of British cities.
- small city bombings we've established could have some usefulness, but systematic city bombing was hardly that useful. The only time a more massive city bombings could be useful is if the enemy moves all weapons factories into cities, like the Japanese did. Or when the enemy refuses to give up even after clearly strategically losing the war badly, like was the case for the Japanese. In fact, city bombing was what lost Luftwaffe the air war over Britain (it would perhaps still have been lost, but not as early as the early winter 1940), what made Stalingrad such a splendid ground for snipers (again not crucial to the outcome, but it probably helped the Soviets) and IMO it delayed allied advance on Berlin quite a lot. The allies had little else to do in 1941-1944, so there it probably had some usefulness, but the city bombings after D-Day were IMO only hurting the advance. As shown in the Falaise gap battle, even though ww2 bombers were inaccurate, they could wreak havoc as a tactical weapon by bombing rear elements of an army - artillery positions, bridges, railways, supply lines, roads etc., while using limited city bombings (maybe once every second week on average) to divert enemy units from the frontlines. Using the bomb carpet principle against tactical targets worked quite well. Surely not all missions would succeed, but since the targets were close to the own front and own airfields it wouldn't have been so difficult to even carry out several missions a day to compensate for it. Also remember that such bombings cutting off retreat logistics often forces the enemy to leave a lot of equipment in the retreat. One tank is worth at least fifty men from a military perspective, and one tank taken over means two tanks change in relative strength ratio.
- bombings of oil fields and industry itself hurt economy more than actual city carpet bombings. It's easy to see at the time when factories weren't in cities. When factories were moved into cities of course city bombing became more useful for hurting economy and above all strategic strength because then the key strategical targets were in cities. But the actual terror bombing of civilians had little positive impact for whoever did it.
- both sides overestimated the usefulness of the city bombings. The British and Soviets benefitted from being city bombed - it strengthened British morale and helped them understand that it was worth fighting the Germans (the concentration camps were more of rumors than known fact at that time so they couldn't as effectively as the city bombings convince the British that Hitler's rule was insane and ruthless). The Soviets got ideal sniper terrain in Stalingrad.
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