Following is appreciation of the Chiefs of General Staff prepared
in response to your telegram of 26th January [1]:

Part 1. Principal British strategical interests in the Middle East
are, firstly, sea route through the Mediterranean, Suez Canal and
the Red Sea whose security depends on the defence of Palestine and
Egypt and of fleet base at Alexandria, secondly, the Anglo-Iranian
oilfield, thirdly, security of North-West frontier of India which
is largely dependent on the existence of friendship of and stable
Government in Afghanistan. Fourthly, we have treaty commitments to
Turkey and Iraq.

Part 2. Germany has initiative and may advance into the Balkans
with Aegean coast or Bosphorus and Dardanelles as her objective.

Possibility of Italy joining Germany cannot be excluded. She could
interfere with our sea communications and might attack Egypt and
the Sudan. Russia may advance, either alone or in conjunction with
Germany, into Roumania and further southward. Russia may also stir
up trouble and perhaps advance into Iraq, Iran or Afghanistan.

Part 3. We are preparing to counter the enemy's initiative,
whatever form it takes. We should best defend our interests by
defeating enemy advance on the frontier of Turkey and Iraq. At the
same time we have not sufficient fully trained and equipped forces
to [lock] [2] up in the Middle East numbers required to meet all
potential threats. Our reserves must be kept fluid and our further
preparations in the Middle East are therefore at present confined
to administrative development on scale sufficient to maintain
forces likely to be required. In the meantime we are also using
the Middle East as training ground.

Part 4. We visualize employment of Australian troops as follows.

If, when they are fit to take the field, situation should require
their active employment in the Middle East, we should wish the
Australian Government to agree to that course. If, on the other
hand, the situation in the Middle East at that period was quiet we
should wish to complete their equipment in France or the United
Kingdom and employ in France. It is not our intention to employ on
internal security duties in Palestine, but their very presence in
the vicinity is expected to have salutary effect which will permit
internal security duties to be carried out by smaller or less well
trained forces than at present.

Part 5. Can not give at this stage any anticipated rate of
provision of modern weapons and equipment. A very reasonable
training scale of these has already been provided and it is the
intention to increase this to war establishment scale at least one
month before units will be considered as available for an
expeditionary force.

Following are additional views of Chiefs of the General Staff
conveyed in long conversation with Ironside. [3]

PART 2. Chiefs of the General Staff (1) do not consider German
move in Danubian and Balkan countries probable in Spring. Reasons-
difficulty of military operations and large number of troops
necessary to employ. To me this is not convincing and in my view
probability of such a move must be kept constantly in mind; (2)
consider Italian intervention on the German side unlikely. In my
view probably sound but the whole position might be completely
altered by German move attended by spectacular successes in the
Danubian Balkan countries; (3) consider Russian move unlikely
owing to preoccupations in Finland which would intensify in the
event of Allied action in Scandinavia. Dominion Office cables to
Whiskard [4] of 3rd February and 8th February in my view probably
right but whole position changed if Russia overwhelmed Finland.

PART 3. In my view first sentence correct in respect to the Middle
East but not to Danubian and Balkan countries. I am pressing the
question of what are Allies plans to meet the situation if Germany
moved against these countries.

Russian move in the Near or Middle East or actual military
cooperation between Germany and Russia resulting from Scandinavian
position regarded as development that can be met, e.g., intensive
air action against Baku resulting in serious dislocation of oil
supplies.

PART 4. Ironside strongly emphasized last sentence. Actual field
of employment impossible to forecast at the moment and might in
the event of move in the Danubian or Balkan countries be Near East
or even Scandinavia should the position develop there.

Question would be one for consultation with the Australian
Government in the light of circumstances at the time.

PART 5. Ironside stated that Australians regarded as the best
troops available and when ready for utilization would be given
absolute priority in supply of modem weapons and equipment.