My telegram No. 131 to the Commonwealth and No. 126 to New
Zealand. [1]

Following is the appreciation by the Chiefs of Staff asked for.

Intervention of Italy
1. If Italy decided to intervene she will probably time her entry
to coincide with a new development in the West which might be a
German attack on the United Kingdom or the Western Front, or
invasion of another neutral State. Neither the Italian army nor
the Air Force is in good condition for War and it is probable
therefore that the Italian plan will be to use her Navy to dispute
Allied control of sea communications while using other arms for
raids and diversions.

2. Probable Italian action would be either an invasion of the
Dalmatian coast or Corfu which would no doubt eventually result in
War with the Allies, or direct attack on Allied interests in the
Mediterranean and the Red Sea.

3. There is a possibility which is regarded as remote, that Spain
might enter the War with or soon after Italy in which case
Gibraltar could not be used as a Naval Base and an increased Naval
effort would be required in the Western Mediterranean,
particularly if Italy should occupy the Balearic Islands.

4. Our primary object will remain the defeat of Germany, and it
will be appreciated that with our existing commitments in Norway,
on the Western Front and at home our first aim in the
Mediterranean and Middle East must be to ensure the security of
Allied shipping. Measures to achieve this aim will automatically
cut Italy's communications with the outer seas and the[n]
immediately impose economic pressure, and will also isolate her
East African possessions.

5. Measures are now being taken to re-concentrate the Allied Naval
Forces in sufficient strength in the Mediterranean-the British
being generally responsible for the Eastern Basin, the French for
the Western. As regards the Red Sea, we do not anticipate serious
difficulty in meeting surface or submarine attacks, but consider
it inadvisable to expose troop convoys to the risk of air attack
from East Africa in the early stages of the War.

6. In addition, Allied plan provides for local offensives as soon
as they can be organised; in particular the French from Tunis
against Libya and the Allied forces from Djibouti into Abyssinia.

These would take time to stage. Plans are also under discussion
with the French for taking action against war industries in the
North West of Italy which we consider would be the quickest and
most effective way of bringing possibly decisive pressure to bear.

Balkans and Turkey
7. With regard to the Balkans and the Near East, the situation
will depend upon whether Italy attacks Yugo-Slavia or Greece, or
whether Germany invades the Balkans. We shall not be able to give
direct support to Yugo-Slavia or Greece until the threat on Allied
communications through the Aegean Sea has been countered.

8. We hope that Turkey will join with us against Italy in which
case Allied support will be provided initially through the
Anatolian railway until communications through the Aegean can be
restored. With Turkey on our side the Bosphorus may be closed to
Italy and open to the Allies.

North West Frontier of India
9. The only power which could seriously affect our interests here
is Russia. Italian intervention by itself would have little if any
effect. The present situation in this part of the world is
satisfactory and the attitude of Afghan Government vis-a-vis
Russia reassuring. The possibility of a flare-up of tribal trouble
always exists.

10. The army in India is fully adequate to deal with any situation
in tribal territory and Russia cannot maintain land attacks on
India for a long period. A limited scale of air attack on centres
in Northern India is possible and might lead to local internal
security problems. We have recently equipped two Blenheim
squadrons in India with fighter conversion sets, which would act
as some deterrent. The Russian invasion of Northern Afghanistan
would be a more formidable danger. The Government of India is
investigating the possibility of helping Kabul Government to
maintain authority in emergency.

11. The whole tendency of Russian policy is, however, to avoid
being drawn into major War after their experiences in Finland. We
regard Russian intervention against us as unlikely.

Far East
12. The Foreign Office view is that Japan's ultimate policy will
be decided by the outcome of the war in the West. Meanwhile Japan
remains very heavily committed in China and fears American policy.

Her early intervention is therefore unlikely. The general
indications are that America's reactions to any Japanese
aggression in the Pacific would be very strong. The Chiefs of
Staff consider the possibility of a direct attack on Australia and
New Zealand as very remote.

Australian and New Zealand Forces
13. The intention has always been that Australian and New Zealand
contingents when fully equipped should be employed according to
demands of the strategic situation. The most likely theatres are
the Near East and France. If War breaks out with Italy it is hoped
that it will be possible to reconstitute the Red Sea route within
the first three months. Full War scale of equipment for Australian
and New Zealand contingents will probably be ready by mid-
September. There should, therefore, be no difficulty in
reconstituting the complete and fully equipped diversions [sic]
either in Egypt or in the United Kingdom by that date at the
latest.

14. The anxiety of the Commonwealth and New Zealand Governments in
the event of diversion to the United Kingdom at the present time
and the inherent disadvantages in the splitting of formations are
realised. All possible steps would be taken to reconstitute the
whole of the Expeditionary Force at the earliest possible date.

Meanwhile, if it is found necessary to divert U.S.2 and U.S.3 to
the United Kingdom, it is suggested that the Liaison Officers from
the Australian and New Zealand Forces in Egypt be attached to
these contingents. If the Commonwealth and New Zealand Governments
agree, this could be arranged from here.

15. The possibilities of diversion to India and Kenya have been
examined. As regards India, the difficulties are the complete lack
of modern training equipment and suitable accommodation in hot
weather. In Kenya, there is no suitable accommodation at all. If
U.S.2 and U.S.3 were diverted by [sic] either of these countries,
the ultimate reconstitution and equipment of the whole of
Expeditionary Force would, it is thought, be almost certainly
unavoidably delayed.

16. Having regard to the above considerations it is recommended in
the present circumstances diversion is unnecessary and the convoys
should adhere to their programme. The situation is being watched
from day to day and the Admiralty would issue orders for diversion
if the situation should at any time demand it. In that event
diversion to the United Kingdom is recommended.

The Admiralty is telegraphing separately arrangements for escort
and security in the event of diversion. [2]