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27.

In addition, the northern ports of Spain could be

watched for German movcients, without difficulty, by naval

forces based on the French Biscayan ports.

General Conclusions.

28. So long as our main strategic requirements of a

neutral Portugal aontinue to be fulfilled, we consider that

the advantages which we should gain from the use of

Portuguese bases would be outweighed by the defence

commitments in which we might become involved. On

strategical grounds, therefore, the continued neutrality

of Portugal would be in our best interests and no action

should be taken which might precipitate a situation likely

to lead to Spanish intervention or which could be turned

to German advantage. We consider, however, that all

possible means of pressure in the diplomatic and economic

sphere should be exercised in order to persuade Portugal

to accede to reasonable demands, and that German pressure

should be vigorously countered.

29. The situation will of course require to be reviewed

afresh should the strategic situation undergo any substantial

change.

Cabinet War Room,

-7-

(Signed)

C.L.N. MEWALL.

DUDLEY POUND.

EDMUND IRONSIDE.

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