Your cablegram 138 [1] containing appreciation by Chiefs of Staff
has been fully considered by War Cabinet, and, in so far as
matters calling for immediate decision are concerned, the
following are our conclusions and observations:-

(A) Route and destination of convoy and escorts
(i) It is noted that in present circumstances diversion of convoys
U.S.2 and U.S.3 is not considered necessary and we agree to
convoys adhering to their programmes subject to later
observations.

In reaching this decision the Commonwealth Government assume that
should war with Italy eventuate after either convoy has entered
the Red Sea the protection provided or readily available will be
such as to ensure reasonably the security of the convoys against
sea and air attacks whilst en route to their destination. It is
observed that Chiefs of Staff 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.

(ii) In regard to diversion it is noted that situation is being
watched from day to day, that the Admiralty would issue orders for
diversion if the situation should at any time demand it, and that
diversion to the United Kingdom is recommended. In view of the
fact that immediate action may be a vital factor in the safety of
a convoy, we concur in action along these lines, but desire that
any such decision should be communicated forthwith for our
information and concurrence, and that we should be kept fully
informed on the trend of the situation.

In agreeing to diversion via the Cape Commonwealth Government
again assume that escort arrangements both to Capetown and thence
onwards will ensure security both in respect of surface craft and
submarines.

(B) Equipping and re-concentration of A.I.F.

Commonwealth Government notes with some concern the statement in
your cablegram 129 of 30th April [2] that if the war with Italy
were to break out subsequent to the arrival of the contingents in
Egypt, there might be considerable difficulty in equipping our
troops, as necessary material has to come from United Kingdom
sources.

It will be recalled that the High Commissioner, in accordance with
cabled directions of 26th January [3], made representations on the
situation in the Near and Middle East, the possibility of
employment of Australian troops on active operations, and the
anticipated rate of provision of modern weapons and equipment.

We would urge in view of the statement quoted that the utmost
expedition be used in fully equipping our troops, the present
forecast of which is given as mid-September.

Should diversion of convoys to the United Kingdom become necessary
the Commonwealth Government stress the importance of
reconstituting the whole Expeditionary Force at the earliest
possible date, and note your assurance that this will be done.

(C) Ultimate theatre of employment
The Chiefs of Staff indicate that the most likely theatres for the
employment of the A.I.F. are the Near East and France. You will no
doubt raise this aspect again when the training and equipping of
the Force has reached a stage to enable it to take the field.

(D) General
While appreciating that the Service Staffs are heavily pressed
with a large volume of work, we nevertheless frankly feel that
cablegram 129 should have been accompanied by an appreciation of
the situation involving such radical changes in the routeing and
destination of our Forces. I am sure you will agree that the
preceding sections of this cablegram fully warrant this view.

It is essential for highest degree of understanding and fullest
co-operation that we should be kept fully informed on the higher
strategical direction of the war. Again quite frankly we found the
review of the Chiefs of Staff disappointing when compared with the
special reports which we had had from the C.I.D. The possibility
with which we are confronted in the Mediterranean has, we
understand, been the subject of examination in recent years and we
feel that there should readily be available to Dominion
Governments a comprehensive appreciation along the generally
accepted lines of this class of document.

Whilst the daily D.W. advices and other cablegrams are valued, we
note an almost entire cessation of other documentation relating to
Allied activities and the growth of their efforts and critical
reviews or intelligence reports as to parallel enemy action. If
there is any hesitancy as to transmission of this information it
is suggested that it be forwarded to the Prime Minister as
Minister for Defence Co-ordination, where the use to be made of it
can be determined and the information adequately safeguarded. If
it is possible we would particularly like to be informed regularly
of the strength and disposition of Allied Forces and those of the
enemy in the various theatres. For example, the press has
repeatedly reported great concentrations of land forces in Egypt,
Palestine and Syria, facts which would of course be of importance
to us. We would also like to be informed of military situation at
Narvik as present position cannot be reconciled with apparently
exaggerated press reports of some weeks ago that Germans had been
ejected from neighbourhood.

You will understand that all these observations are made in a
spirit of helpful suggestion so that in the light of the fullest
information we may be able to see how we can best help in relation
to our own Forces. [4]

MENZIES