A full two years before Germany's aggressive naval policy would draw the United States into the war against them, Kaiser Wilhelm announces an important step in the development of that policy, proclaiming the North Sea a war zone, in which all merchant ships, including those from neutral countries, were liable to be sunk without warning.
In widening the boundaries of naval warfare, Germany was retaliating against the Allies for the British-imposed blockade of Germany in the North Sea, an important part of Britain's war strategy aimed at strangling its enemy economically. By war's end—according to official British counts—the so-called hunger blockade would take some 770,000 German lives.
The German navy, despite its attempts to build itself up in the pre-war years, was far inferior in strength to the peerless British Royal Navy. After resounding defeats of its battle cruisers, such as that suffered in the Falkland Islands in December 1914, Germany began to look to its dangerous U-boat submarines as its best hope at sea. Hermann Bauer, the leader of the German submarine service, had suggested in October 1914 that the U-boats could be used to attack commerce ships and raid their cargoes, thus scaring off imports to Britain, including those from neutral countries. Early the following month, Britain declared the North Sea a military area, warning neutral countries that areas would be mined and that all ships must first put into British ports, where they would be searched for possible supplies bound for Germany, stripped of these, and escorted through the British minefields. With this intensification of the blockade, Bauer's idea gained greater support within Germany as the only appropriate response to Britain's actions.
Though German Chancellor Theobald von Bethmann Hollweg and the German Foreign Ministry worried about angering neutral countries, pressure from naval leaders and anger in the German press about the British blockade convinced them to go through with the declaration. On February 4, 1915, Kaiser Wilhelm announced Germany's intention to sink any and all ships sailing under the flags of Britain, Russia or France found within British waters.
The Kaiser warned neutral countries that neither crews nor passengers were safe while traveling within the designated war zone around the British Isles. If neutral ships chose to enter British waters after February 18, when the policy went into effect, they would be doing so at their own risk.
The U.S. government immediately and strongly protested the war-zone designation, warning Germany that it would take any steps it might be necessary to take in order to protect American lives and property.
Subsequently, a rift opened between Germany's politicians—who didn't want to provoke America's anger—and its navy, which was determined to use its deadly U-boats to the greatest possible advantage.
After a German U-boat sank the British passenger ship Lusitania on May 7, 1915, killing over 1,000 people, including 128 Americans, pressure from the U.S. prompted the German government to greatly constrain the operation of submarines; U-boat warfare was completely suspended that September.
Unrestricted submarine warfare was resumed on February 1, 1917, prompting the U.S., two days later, to break diplomatic relations with Germany.
Taken from: http://www.history.com/this-day-in-history/germany-declares-war-zone-around-british-isles [04.02.2015]