Leto and Paul consider the threat on Paul's life. Paul defends Hawat and his actions, and Leto agrees with his son.
When Hawat enters the room, he begs to tender his resignation, but Leto will hear nothing of it. He just asks Hawat to call in the others for the staff meeting.
Yay, time for a staff meeting. They're just as fun in fiction as in real life.
The gist of the meeting is money. We learn the Harkonnens have jacked billions of solaris (future money) from the Arrakis operation and left House Atreides with equipment in disarray. It can be fixed, but at a severe cut to their spice profits.
Will the Spacing Guild, CHOAM, or the Emperor help out? Eh, nope.
Next on the agenda, Duke Leto discusses how his hold on Caladan depended on sea and air power. Here, he needs his men to develop desert power. This requires an alliance with the Fremen. Leto knows the Sardaukar are coming, and they'll only be able to withstand the attack with Fremen fighters.
Leto orders Hawat to forge certificates allowing them to seize the property of the remaining Harkonnen cells and turn out their families. Paul and Gurney both think the move is immoral.
Idaho busts into the meeting, having just defeated a group of Harkonnen mercenaries disguised as Fremen. They were trying to smuggle a crysknife off Dune.
A Fremen named Stilgar strolls in after Idaho.
Stilgar warns Leto not to unsheathe the blade unless he is willing to follow the customs and traditions of the Fremen once he does so. (Remember, if a crysknife is drawn, then it cannot be sheathed until it draws blood.) Leto acknowledges the Fremen's traditions and leaves the blade alone.
It is agreed that Idaho will remain with Stilgar and be welcomed into his sietch (Fremen home). This way, Idaho will maintain a dual alliance between the Atreides and the Fremen, serving as ambassador for each.
Idaho accepts. He knows he must get the Fremen to join with Atreides before the Sardaukar arrive, but the Fremen's deep independence means it will be difficult.
Back to the matter of equipment. To help better their mining equipment, Leto and company decide to look for bases built on Arrakis during the Desert Botanical Testing Station period. It is thought that a man (perhaps a god) of the Fremen named Liet knows, but they decide to ask someone a little more down to earth, the current Judge of Change and the planet's ecologist, Dr. Kynes.
After that, it's a break and a go team, and the crew is off.
Paul notices that his father is acting desperate now, like "a caged animal" (12.225).