1. Mr. Evatt, your Minister of External Affairs, is reported as criticizing in public our not yet having declared war on Finland, Hungary and Roumania.  The question of Finland is very difficult because a formal declaration of war will bind them to the Germans, lead to greater pressure on the Russian northern front, and greatly disturb our friends in Sweden and to a lesser extent in Norway, whereas by other methods we may induce them simply to stop fighting and send a large portion of their soldiers back home. I have had correspondence with Stalin on the point and have told him that unless there is (Quote) a cessation of military operations and the de facto exit of Finland from the war (Unquote), to use his own words, within a fortnight from 21st November we shall declare war upon Finland. Stalin is satisfied with this and our relations have become extremely cordial. The point is now being put in a most severe form by the Foreign Office to the Finnish Government, and we shall see with what result. If we have to declare war on Finland, we shall of course do the same to Hungary and Roumania. The arguments about this also are evenly balanced, especially in the case of Roumania, which has been made a catspaw by Germany. I will let you know what happens.
2. It would be a great pity if while these delicate and highly disputable matters are in the balance, your Ministers should start criticizing our policy in public. We have never said a word in public about Australian Government's insistence upon the withdrawal of all troops from Tobruk, which cost us life and ships, and added appreciably to General Auchinleck's  difficulties in preparing his offensive; and no one here or I presume in Australia outside the circles of Government has the slightest inkling of the distress which we felt. I am sure it is far better that all these inevitable divergences should be kept secret, and that we should try so far as possible to understand each other's difficulties. Surely the sending of the PRINCE OF WALES into eastern waters in face of the grave misgivings of the Admiralty about the undoubted risks of a break-out by the TIRPITZ in the next few weeks should convince you of our wish to act towards your Government in true comradeship and loyalty.
3. Accept my deepest sympathy in the feared loss of the SYDNEY So close to Australian shores.  We also have had a grievous blow this week in the loss of the BARHAM, which blew up as a result of a U-boat torpedo, involving the death of about seven hundred men.
This is being kept strictly secret at present as the enemy do not seem to know and the event would only encourage Japan.
4. General Auchinleck is in good heart about the battle in Libya, although it will be hard, long and bloody.