CAB80-13 — Page 54

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Economic Warfare.

25. Only small quantities of goods have been seized in prize during the week, being parts of cargoes of nine ships (including six Italian) out of a total of twenty-five ships dealt with by the Contraband Committee. Sixteen ships, of which nine were Italian, were detained for enquiry.

U.S.S.R.

Baltic.

26. Naval activity in the Baltic continues, and an analysis of recent move- ments suggests a considerable concentration of ships off the Estonian and Latvian coasts from Baltiski to Libau and off the Finnish coast.

A Soviet minelayer was reported last week leaving Libau with a full load of mines, and there have been reports of destroyers leaving that port also loaded with mines.

The significance of this increased activity is not clear, but the Soviet may be taking all possible precautions against an attack on the Baltic States. Recent political moves in those States point the same way.

Several reports have been received recently that the uncompleted hull of a cruiser, either Lutzow or possibly Leipzig class, has been seen under tow in the Baltic, off the Estonian coast. It is considered that she may be now in Kronstadt or Leningrad. If this is true, it suggests that previous reports, that the Russians had exchanged submarines for a cruiser with Germany, are substantiated.

Baltic-White Sea Canal.

27. Up to the 6th June no ships other than Soviet merchant vessels entered the Canal. It is considered improbable that the U.S.S.R. would permit the use of the Canal by German warships, firstly because she does not wish to facilitate the German grip on Northern Scandinavia, and secondly because she is not anxious for any foreign Power to become too well acquainted with the Canal.

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Western Front.

28.

MILITARY SITUATION.

The German offensive launched on the 5th June on the front from St. Valery to Laon has made steady progress in the face of determined opposition by numerically inferior Allied forces. Three German army groups appear to have been employed.

29. The first enemy thrust over the Somme south and south-westwards from Amiens, with two armoured divisions on its west flank, succeeded in reaching the line of the Seine and Oise. This was immediately followed by a corresponding thrust in the centre, southwards towards Soissons, which reached the Marne at Château-Thierry. The main thrust, including four armoured divisions, developed on the 11th June on the Aisne between Rethel and Neufchatel (north of Reims). In this sector the enemy have reached the Marne at Chalons.

30. On the 6th June 51 Division were holding a front of 15 miles on the River Bresle from Gamaches to the sea. A composite regiment of one Armoured Division was in support, the remainder of the Armoured Division having with- drawn South of the River Seine to refit. A composite division of L. of C. troops under Brigadier Beauman was holding the crossings over the River Bethune.

31. After three days' fighting 51 Division withdrew along the coast to the line of the River Bethune, with one brigade of Beauman's Division in support. Meanwhile, the remainder of Beauman's Division and one Armoured Division withdrew south of the River Seine to reform.

32. On the 11th June the position of 51 Division and French IX Corps was becoming critical. Two brigades of 51 Division were sent back to assist the French in preparing a bridgehead to cover Le Havre. The remainder, with part of French IX Corps, were surrounded at St. Valery. Evacuation during the night 11th-12th June was held up by fog, and on the 12th June the force at St. Valery compelled to surrender. During the night the 12th-13th June approximately 11,000 Allied troops were evacuated from Le Havre and landed at Cherbourg.

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