So... what happened next is a learning moment. Axis decided to DOW Crete primarily because there was a JU-52 unit in Athens with a German paratroop core. In the DOW the allies aligned Crete to CW, having learned their lesson. When Crete was conquered, which was a sure thing because of the surprise, there were Greek ships in Heraklion... they had to rebase... but it dawned on me ... these were still Greek ships, aligned to USSR, which is why they still had a brown bar across the top. They had to be destroyed because they couldn’t rebase because they couldn’t get into the Black Sea. The game was correct as far as I can tell.
In retaliation the CW took Leros and captured a stranded Italian cruiser. Kind of cool, but what they do with Leros remains to be seen. Maybe a base for B-24 raids on Ploesti? Actually, what the axis do with Crete remains to be seen but North Africa is at least in range of German air transports - far safer than Italian sea transports.
Actually, the ships in Crete likely had places to go: Any CW owned port in the Med that did not have a CW unit in it -- Cyprus, for example, or possibly someplace in Palestine. If there were Axis combat vessels in the Eastern Med., then you could not click direction on the destination; first you would have had to control-click on the Eastern Med, have a possible interception attempt, and after that was resolved, have the new Soviet ships move to their destination. Clicking directly on the destination would not work.
I thought I knew how to play this game....