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77.

Provided we can prevent enemy gaining high degree

of air superiority, we think we should be able to prevent large scale invasion of United Kingdom, though our our shortage of destroyers gives us grave anxiety. We consider enemy will attempt invasion assisted by large-scale air-borne raids. We have sufficient troops in this country to meet this threat, though certain items of important equipment are deficient.

8.

We shall endeavour to hold our position overseas, but French collapse would mean loss of Naval control in Western Mediterranean, although we should attempt to maintain some control of the western approaches to the Mediterranean from bases on the Atlantic seaborad. Italy could, however, concentrate her attacks on Malta, Gibraltar and Egypt. We must hold Egypt and this necessitates retention of capital ship fleet based on Alexandria. This will also exercise stabilising influence on Turkey. and Middle East, and will contain large proportion of Italiah Naval forces from operating in Western Mediterranean and Atlantic.

9.

If, in spite of the restraining effect of the United States of America, Japan were to take the opportunity to alter the status quo in the Far East, an action which at present seems unlikely, we shall be faced with a Naval situation in which we shall not have, without France, sufficient forces to meet the combined German and Italian Navies in European waters and the Japanese fleet in the Far East. In the circumstances envisaged it is most improbable that we could send any additional naval forces to the Far Easto We should therefore have to rely on the United States of America to safeguard our interests there,

10. Our ability still to defeat Germany and Italy would depend mainly on our being able to control at source Europe's essential overeseas supplies, though it would still be necessary to retain certain key strategical positions from which we can exert virtually a blockade of Europe. Despite immediate gains from conquest, Germany would still be very short of food, natural fibres, tin, rubber, nickel and cobalt. Above all, she would still have insufficient oil, Given full Pan-Ameri can co-operation, we should control all deficiency commodities at source, and by winter 1940/41 many European industrial areas, including parts of Germany, would experience widespread shortages, At same period, shortage of oil would force Germany to weaken her military control in Europe. By summer 1941 it would be difficult for Germany to replace military equipment, and large part of industrial plant of Europe would stand still. Air attacks on Germany's oil centres would contribute to her defeat and reduce her air offensive, but, until we can obtain additional resources from Dominions and America, these attacks would be on a limited, and probably diminishing, scale.

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