Memory Loss?

Yeah, I meant C3.

She's already shown herself to be a manipulator of memories, and you want to take her seriously word for word? Heh.

No, I think it's better in Castanea's situation to look from her perspective, and not so much her words. "Conducting a rather dangerous research" is a convenient excuse to lock the Milletian elf up, and be a scapegoat to warn off other elves from contacting giants, but it's not necessarily the whole reason (and nor does it have to be true). As a leader of her race it's definitely a plus to the elves against giants if she managed to get her hands on a secret ability with potential to fight off dragons, killing the elf or erasing the Milletian's memory is out even if she could. Heck, Hagel might've even been sent to free the Milletian on Castanea's orders, directly or indirectly, so she can observe the elf without making herself look bad.

Of course, this is stipulation and shouldn't be taken as fact, at least not yet. But consider that leaders generally have to keep the entire picture in mind.