This is because it's when you die, you lose. You're not just any sub captain - you're the hero of the story, and when you fail, the bad guys ultimately win.
If you don't like this approach, you can edit out the offending 'death' events:
Go to StreamingAssets\default\campaign\campaign001\langu age_en\events
and find 'event_lost_at_sea' and change the following line:
NextAction=event_early_end_1
to
NextAction=END
Now when you die, it won't tell you that the Soviets took over the free world anymore.
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