Active discussions at War Cabinet last night about the Middle East. I spoke freely about the Benghazi business. It is admitted that Wavell  completely under-estimated the speed and power of the German attack and I think that we must be prepared for further withdrawal. The trouble, as I pointed out to Cabinet, is that our Generals consistently under-estimate Germany's capacity.
Wavell is doing everything possible to block the advance but it would be plainly out of the question to weaken the position still further by taking away Australian troops now there.
It is recognised that this means some weakening of Lustre forces but as compensation for this you must take into account that Yugoslavia, which seemed out of the picture two weeks ago, is now our ally, is fighting vigorously and may well embarrass the whole Italian position in Albania. It cannot be said that anybody feels happy about the business but, like you, I have never been able to see that we could afford to desert Greece.
The Libyan affair is bad but navally we have been improved by battle of Cape Matapan  and, as I indicated in my earlier cable, air reinforcements are going forward pretty satisfactorily.
I have strongly urged the maximum reinforcement in relation to antiaircraft guns and anti-tank guns, in neither of which we are very strong.
We must prepare our minds for some reversals, but at the moment the position in the Balkans, though obscure and dangerous, is better than we could have hoped for a few weeks ago.
I hope to see Eden  on his return this week and can then get a first hand picture for transmission to you.