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The redistribution of the numerous Italian divisions on the Franco-Italian frontier will probably be delayed until the attitude of the French colonial possessions in North Africa becomes definite. Up to the date of the armistice no major military activity had been reported, and, although the Italians referred more than once to operations on the Franco-Italian frontier, there is no confirma- tion that they were at any time heavily committed on this front.

Mediterranean and Middle East.

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66. The situation at Gibraltar is reported to be quiet. A number of British troops, R.A.F. personnel and civilians have arrived from Marseilles. Their accommodation and maintenance present difficulties and tend to prejudice the security of the fortress. Malta has suffered various air attacks which are described in a later paragraph.

67. The 7th Armoured Division has carried out reconnaissances from Egypt over the Libyan border to a depth of 60 miles, in the course of which some armoured cars have been lost. The area is reported clear of enemy up to about 50 miles. The main body of a Libyan division is believed to be located at Bir El Gobi, about 60 miles from the frontier.

Operations in Libya and Italian East Africa have been confined to minor engagements involving the use by Italy of native troops.

68. Between the 19th and the 23rd June mechanised patrols of the Sudan Defence Force carried out three further raids across the frontier near Kassala. The enemy suffered severe casualties, amounting to about 100 in one encounter. We had no casualties.

69. On the 26th June the Police detachment at Buramo (on the Somaliland border south-west of Berbera) withdrew intact after an attack by enemy tanks. and tribesmen.

Central Europe.

70. The existence of a training school for parachutists at Varpalota in Hungary was reported some time ago, but it is only recently that any details have been received. Training, which has lately been speeded up, is stated to follow German practice and to last three months. Volunteers of varying ages, drawn from the Hungarian Air Force, are taught to jump at five-second intervals. In addition, light automatic weapons, machine guns, light field guns, explosives and W/T transmitters are dropped by separate parachutes. The object of the training is stated to be the preparation of parachutists for dropping behind the Roumanian frontier fortifications and on air ports.

Baltic States and Finland.

71. There is still little information regarding the future of the armed forces of the Baltic States, but the wide distribution of the Soviet garrisons must render them helpless. The Commanders-in-Chief of all three countries have been dismissed and replaced by insignificant figures, who will presumably carry out any orders the puppet Governments may give them.

72. It is calculated that the losses imposed on Finland by the war and the peace terms amount to approximately 30,000 million Fmks., or, say, £150 million, which exceeds the total ordinary revenue of the State for six years.

Beset by economic difficulties, Finland appears to live in constant fear of further Soviet demands. Russian frontier guards have been aggressive and Finnish guards have been killed. Although the Finns have neither retaliated nor protested, they have taken various military precautions and have not demobilised their armies. No Soviet troop movements towards the Finnish frontier appear to have taken place, and there is nothing definite to indicate further Russian aggression in this quarter. Nevertheless, this possibility cannot be excluded.

Reports have been received of arms traffic between Germany and Finland, but these cannot be taken to imply definite military collaboration between the

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