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Extent of German-Soviet Military Collaboration.

4. Germany and the Soviet have for the moment common interests in achieving the disruption of the British Empire. It is possible, however, that Germany may be reluctant to see the Russians involved in large-scale hostilities with the Allies for fear of being deprived of Russian supplies which might otherwise be forthcoming. On the other hand, important parts of the British Empire and other Allied interests can be attacked from Russia, and once hostilities commenced the Germans would doubtless encourage the Russians to force dispersion of effort upon the Allies.

5. Should Allied-Soviet hostilities commence, therefore, we must expect Germany to be ready to provide such military aid as the Soviet may be willing to accept. Initially, such assistance could take the form of military missions, which might effect some improvement in the direction of Soviet military operations, and the provision of German air force units to operate from Soviet bases. At a later stage Germany might send detachments or even complete formations to operate. with Russian forces.

Weak points in the U.S.S.R. System.

6. The weak points in the Russian system may be summarised as follows:- Transportation.

(a) Russian railways work to capacity. Any unusual strain, such as that created by military operations, is apt to cause dislocation over wide- spread areas. Moreover, although Russia's natural resources make her virtually immune to external economic pressure, the interruption. of her seaborne trade, particularly in the Black Sea, would add to her internal transportation difficulties. Baku is a focal point of Russian communications southwards to Iran and eastwards to India.

Industry.

(b) The relative geographical location of Russian natural resources and Russian industry throw a great strain on transportation. Industrial areas are not easily accessible to air attack, but they are vulnerable through the transportation system, and to some extent because of their dependence on oil.

Oil.

(c) Reliance on the Caucasian oil supply is a fundamental weakness in Russian economy. The military forces rely upon it, Russian agriculture is mechanised and there are insufficient horses to make reversion to horse traction practicable. 80 per cent. of Russia's oil production and 90 per cent. of her refining capacity is centred in the Caucasus. A large scale interruption of the supply of oil from this area would therefore have a far-reaching effect upon Soviet economy. We are advised that it would in time paralyse Russian military effort and disorganise Russian national life. Russia would be forced into competition in other markets, probably at an early date, and this might well bring her into conflict with German interests in Roumania.

Internal Situation.

(d) The control exercised on an apathetic people by the existing ruthless régime is capable of suppressing popular risings. There are signs, however, that popular discontent in Russia is spreading, particularly in Transcaucasia.

Soviet Military Potential.

7. The commitment in Finland must, for material reasons alone, limit Russia's ability to conduct major operations elsewhere. Any extension of this commitment, combined with large-scale operations in other theatres (necessitating further mobilisation), would impose a tremendous strain upon

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