CAB80-25 — Page 131

!

Page 131

coming from Rumania. Should these suplies be seriously interfered with the drain on reserve stocks will continue.

We cannot, therefore, allow the British to become firmly established, in strength, on the mainland of Greece whence the Rumanian oil refineries could be attacked from the air.

Considerable surplus stocks of refined oil products held in Runania would be available for any operations we might wish to undertake in Eastern Europe.

Could we free the Eastern Mediterranean from the domination of the British Fleet even to the extent of permitting coastvise oil traffic the position would be much improved.

The consolidation of the British position in Greece might have further serious results on our economic position in that it would tend to strengthen Turkey to refuse supplies of certain commodities we badly need and would encourage Yugoslavia to adopt a less helpful attitude in the economic field.

9.

It is, however, in our interest to maintain tranquillity in the Balkans in order to encourage maximum production for the benefit of our e conomy

It and to avoid interference with transport. will be particularly important not to hinder the transport of oil from Rumania during the spring and early summer of 1941.

10. The continuation of supplies from French North Africa is of economic advantage and is a factor of which some account must be taken.

11.

The economic position of Spain is desperate. Unless food supplies continue to enter from over- seas, starvation will be common when the 1940

We are already faced harvest has been consumed. with the position that if absolute starvation is to be prevented in some of the countries already occupied, we shall however unwilling

be forced

to deplete our reserve stocks of bread grains and Pats. The occupation of Spain would add greatly to the existing difficulties unless we let the Spaniards starve. On the other hand,

a

starving nation of Spaniards is not calculated to be a good companion and the strain involved in keeping open our lines of communication might well prove too great. Unless, therefore, occupation of Spain could be counted upon to ensure quick victory the economic problem involved must be a deterrent.

It is not a bar.

12. Portugal is better able to maintain herself if

We only because of her stronger stock position. should like to obtain complete control of Portuguese tin and wolfram resources which become of proportion- ately greater importance our stacks of-these_ commodities are reduced.

13.

Military. The morale of our Navy including that of the submarine crews is good.

Owing to our endeavour to secure the friendship of England we sacrificed the interests of our navy and

The Italian the British fleet is vastly superior.

fleet has shown itself ineffective in action though

-4-

Page 131

116

Page 131

Page 131