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We're playing the 2004 board edition of Axis and Allies. Page 13 of the rulebook states:

A transport may not load or offload in a territory adjacent to a hostile sea zone

To me, that means that if Australia has a British infantry, and Britain has a transport on sea zone 40, but Japan has an aircraft carrier on sea zone 38 (on the total opposite side of Australia), the transport could not load the infantry.

Is that correct? Or does it mean that the Japanese carrier would have to be adjacent to the transport as well?

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I believe you are correct. Australia is adjacent to a hostile sea zone, and therefore British transports cannot load or offload infantry in Australia while an enemy ship is in any of the sea zones around it. I base that on the fact that "territory" always refers to land, where-as "zone" refers to sea.

Seems incredibly overpowered. But that is how the rules read.

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