Submarines worked really well for me last game. You can definitely use them well. I built 150 by late 1940 and have 120 more in various stages of completion. 45 were sunk (mostly because i had 100 in the ocean and fought both the French and British navies rather than waiting to capture France), nearly all damaged, but i have put at least 3,000 British convoys to the bottom of the ocean with the Kriegsmarine running around sinking the ASW destroyers while using Navs to locate and avoid large UK fleets and only engaging them at night when i have a huge advantage. Free France's fleet is also out of supply because I sank all their convoys too

. Now if only I could get some NAVs down there to bomb the port...
Submarine campaign was so effective the UK was down to 0 carriers, 5 battleships and ~50 destroyers. I only lost the 45 subs, 1 BB, 1 BC, 2 CA and a couple destroyers.
I just looked and in October 1940 the UK was reduced to 0 IC and all of its armies abroad are starving. Suez and Cairo fell to the Italians once the British ran out of supply. Loaded the game as the UK to see that 20% dissent and a lack of Rares gave Britain its 0 IC.
Britain starving, Suez closed and Malta taken by the Italians caused a USA DOW on Italy. I annexed Romania, Hungary, Sweden, Denmark, Norway, Yugoslavia, France, Netherlands (sank their whole merchant fleet too off the coast of Parimbo with some AUX raiders) Belgium, Lux, Austria, Poland, and Czechoslovakia, but apparently the Italians taking Suez is more threatening :rofl:
Time to rebase some subs in Japan and see if Donitz can keep the USA at bay until i'm done with the Russians.