Yunipuma: OP played on medium difficulty. And did it exactly because he is NOT ok with being punched in the gut on a regular basis with unfair mission setups.
That's my whole point - if developers create a game which punishes player for starting open combat, then they MUST give player an option to NOT engage in open combat. In agent elimination missions there IS such an option, but in this particular mission (which is part of story and CANNOT BE AVOIDED) there is no such an option. So yes, I find this game's core design decisions bad. IF developers change this approach I'll buy the again again, but now - it's farewell.
This may sound harsh - I'm a straight forward guy, I'm aware of that - but you are not meant to succeed on every mission (unless Deadpen/Kodiac dies which ends your game).
If you fail your mission you're agents are not automatically dead, they are just missing in action. Unless they went down during the mission and you saw them bleed out, then they are dead.
They may return after a few hours/days or not. That's what makes it a great spy-game. You can - after that mission you had trouble with - brainwash agents, make them sleeper agents, you name it. So can your enemy which means that your returning missing agent might now sabotage your efforts; double agents!
See missions from the opposing party's point of view. Usually you're counterpart spies on something, you send your agents in infiltrate their operations and attack without the enemy noticing. Now it's their turn to do the exact same thing on you except you know they are onto you (you're told that the enemy is looking for your hideout). Act accordingly; you know that the only phase you'll get is open combat. There is no need to be stealthy so have your agents equip those light vests you hopefully looted on earlier missions and you might even win the encounter (it wasn't easy, at all, but I somehow managed to get all three agents out alive).
Sure, you have to think strategically in advance but ..! You get the point.