199 Memorandum by Mr J. D. L. Hood, Department of External Affairs

n.d. [on or after 2 May 1940]

THE ALLIES AND ITALY

Telegrams 297 and 298 from the High Commissioner [1] traverse very fully the arguments for and against immediate reaction by the Allies to an Italian move against Yugoslavia, and reach the conclusion that the advantages of immediate reaction would outweigh the disadvantages.

This conclusion would seem to be greatly reinforced by consideration of the question on a rather broader aspect than the above telegrams touch on.

Question of whether to take action against Italy or not should be judged solely from the point of view of whether the objective of defeating Germany is thereby helped or hindered.

With the possible exception of the Swedish northern iron fields, the only action at present open to the Allies in the prosecution of the war against Germany appears to be (a) economic, (b) political and diplomatic.

On the economic side Germany has already substantially prolonged her period of endurance against blockade by the occupation of Denmark and Norway and the isolation of Sweden. In the light of German counter-efforts so far, the complete certainty of the blockade as a means of defeating Germany must be open to doubt.

Even if the long range result is held to be inevitable, that only means that Germany win choose her own time and means for an offensive which she will make every effort to make decisive.

On the political side, the prospective Allied failure in the Norwegian campaign may cause a total collapse of the remaining neutral resistance to German pressure. So long as the present Allied policy towards the neutrals is maintained, it is hard to see how the Allied diplomatic position in the Small States of either western or south eastern Europe could be recovered.

The only way out of this situation, which has not even the merits, so far as the Allies are concerned, of a stalemate, seems to be to work on the position of Italy.

Italy is openly cooperating with Germany, though so far short of actual belligerence. It is too late to hope that Mussolini can be induced by Allied offers or placation to assume neutrality as distinct from non-belligerency which in effect means actually assisting Germany in economic field while awaiting a favourable opportunity to intervene militarily. [2] But the circumstances do give an opening for striking at Germany (not necessarily in a military sense) through what is undeniably the more vulnerable partner in the Axis.

Under present conditions Germany has the advantages of Italian support both economic and diplomatic without the liability which might be involved in actual Italian belligerence. The Allies suffer the disadvantages of an unfriendly Italy without the advantages, in the shape of blockade enforcement and active support of Turkey and possibly other Mediterranean States, which would follow from the existence of a state of war with Italy.

The disablement of Italy, if it could be effected without excessive Allied losses in the Mediterranean and Near East, would be a heavy indirect blow at Germany. It would facilitate not only a very substantial tightening of the blockade, but it would also eventually [3] reopen the way to the exercise of Allied influence in the Balkans and the Black Sea area, which otherwise seems destined to succumb more and more to German demands. This is an objective which might well be considered irrespective of whether Italy undertakes some such adventure as an invasion of Yugoslavia in the near future. If Italy does take an initiative of this kind the arguments for Allied reaction are, as the High Commissioner's telegrams suggest, very strong. But if the present occasion passes there would seem to be an equally strong case on general grounds for forcing the issue with Italy. The political damage to the Allies, arising in the long run out of continued acquiescence in the present situation, would appear to be hardly less than that which, as the High Commissioner points out, would flow from acquiescence in an Italian military adventure.

The immediate action necessary need be only a requirement that Italy should comply with Allied blockade policy to the same extent as other European non-belligerents. This would have the advantage that if it became necessary to enforce the demand the onus of starting hostilities would be put on Italy.

1 Documents 197 and 198.

2 The words 'as distinct ... militarily' were added by Lt Col W.

R. Hodgson, Secretary of the External Affairs Dept.

3 This word was added by Hodgson.

[AA: A981, ITALY 30, ii]