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Having conquered Egypt and shut down the Suez Canal, the Afrika Korps watched in stunned amazement as the British pulled all of their transports from the Indian Ocean into port in Bombay. India was known to be nearly undefended, the Commonwealth troops having been either lost in the fighting in North Africa or now trapped in the Middle East. "This is exactly the break we've been waiting for!" one of the staff officers exclaimed, pointing to the grim statistics of the henceforth unsuccessful U-boat campaign. "Over 1/10 of the global Allied transport fleet in one spot...undefended!"

The Italian fleet moved swiftly to blockade the port. Reconnaissance confirmed that it was full of Allied transports. A small landing force secured the area and the Italian frogmen moved in. Before their astonished eyes, the Allied transports floated up into the sky like blimps, drifted across the Indian subcontinent, and settled down gently in Calcutta harbor, unharmed, and safely out of reach.

Is the ability for surrounded ships to retreat intentional or accidental? I've never noticed it happen before, and I'm fairly certain that in an older version fleets in port were destroyed when I captured a blockaded territory.

It appears by comparing section 8.6.2 of the revised (version 1.2) manual to the old one that naval retreat priority 7 may have been modified back in 1.040 to remove the "valid naval movement path free of enemy units" bit, thereby allowing surrounded fleets to escape, so long as they don't have to go too far or through an enemy-controlled strait.

This would also explain the battleship that mysteriously appeared at Malta without having to fight the Italian fleets surrounding it after an earlier battle in the Eastern Med...

Battlebyte, I´ve noticed another semi-related problem regarding nonsensical sea forces rules. I was playing the Russian side and my fleets in Leningrad were displaced to the sea region adjacent to Archangel when it was captured. Obviously, there was no viable way (canal sytems, connected rivers, etc.) in place for this to happen. An additional negative side effect to this situation was that I was unable to transfer Wallies supply points because the transports could not share the sea region with the Russian ships. This ought to be looked into particularly considering the historical reality of Russian convoy escort support at the end of the voyages during the Murmansk runs of WWII. Could multinational (Allied) sea forces be allowed to share a region? Why not?
Thanks for your time,
Christian

Final note, yes, I can move my Russian fleets into port in Archangel, but I really ought not to have to and besides that, they never should have been beamed over there in the first place.

Battlebyte, IIRC there was a deliberate change made in an earlier version to prevent ships from being trapped and destroyed. An old strategy involved trapping the fleet at Pearl Harbor and destroying the whole thing that way! Generally, the new rules work well but there are some nonsensical exceptions - particularly as it concerns the Russians as noted by christian. I don't know if I'd expect a change at this point but I agree it would be nice if Allied nations could share sea spaces.

Thanks for confirming that. As long as I know it's reliable and not just a glitch, I can expect it.

And yet here I am, nearly a year later, watching in awe as the Italians shoulder their battleships like canoes and march them from Taranto to Venice. (Do they have to cross the Alps?)

Why do I never learn?