Additional balance note:
On TripleA I set all sides to the Fast AI to guarantee equal players. As you can see, the Allies clearly won:
SZ101 has ships from both US & UK in it. Germany is only currently at war with the UK. Can Germany attack UK ships only without provoking war with the US?
Yes it can DarthBlitz. I am afraid I do not have the rules in front of me to show you where it says so though.
In 1940 Europe 2nd Ed. manual. Pg. 15, in the “Powers Not At War With One Another” sidebar:
“If a power at war attacks a sea zone containing units belonging to both a power with which it’s already at war and a power with which it’s not at war, the latter power’s units are ignored. Those units won’t participate in the battle in any way, and a state of war with that power will not result.”