00011360.gif page 6 so. A consideration, however, of the strength of the Russian forces, the distances over which withdrawal is possible, and the magnitude of the supply problems which would confront the advancing German armies, leads us to the conclusion that Russian resistance cannot be crushed in 1942 unless tactical errors lead to the the risking of too great a share of Russian manpower and materiel in stubborn and unsuccessful defense of fixed positions. If this is the German view, the question which will confront the High Command is, how much of an advance on the Central and Northern front will it be profitable to make? The further the advance, the weaker the enemy becomes in terms of materiel, productive capacity, and manpower but the longer become the German supply lines and the greater the cost in expended manpower and materiel. If Leningrad and Moscow can be taken without an exorbitant wastage of resources - and this seems to us probable - it will be done. But the German advance will fall short of decisive results. If this reasoning is correct, it follows that Germany will be confronted at the end of 1942 with its eastern enemy still in the field - though in a seriously weakened state - unless, in the meantime, peace terms can be negotiated. (1) (b) _By Peace Negotiations_ It is clear that Stalin is fighting his own war, not that of the Anglo-Saxon powers. If at any stage the ___________________ 1. A factor which is difficult to evaluate in the possibility that the Japanese will be able and willing to attack in Siberia if Hitler gives the word. Clearly the final neutralization of Russia can be accomplished jointly by these Axis powers much more readily than by one alone. 00011361.gif page 7 advantages to Russia of a negotiated peace outweigh those of continuing the war, Stalin will negotiate. It is difficult to see, however, that anything short of the expectation by Stalin that Germany will be able (a) to crush the Russian armies completely and (b) to hold off indefinitely the Anglo- Saxon powers in the west, would lead to a balance in favor of peace for Russia. There can be no doubt that Germany would welcome the opportunity to free its hands of Russia for the struggle in the west and would be prepared to pay highly for it _if_ she could be sure thereby of neutralizing Russia. But the only safe way of neutralizing Russia would be by disarming her and it is more than doubtful whether a peace based on Russian disarmament would be acceptable to Stalin unless he were convinced that the struggle is hopeless. Since it is our opinion, on existing evidence, that the crushing of armed resistance in Russia is beyond Germany's strength in the period before the Allies are ready to engage Germany extensively in the west, it follows that we regard the neutralization of Russia by peace negotiations as unlikely. It is worth emphasizing, however, that Russian strength and will to resist may be heavily influenced by the margin of supplies that Britain and the United States succeed in transporting to the Russian Front. GERMAN CONTROL OF THE MEDITERRANEAN The events of the past year in North Africa may well be interpreted by Hitler to indicate the feasibility of a push to the Suez Canal and the elimination of the British fleet from the Mediterranean with forces no larger than can be spared from the Russian campaign. 00011362.gif page 8 The shipping shortage has apparently made it thus far impossible for the Allies to assemble in Egypt a force sufficient to drive the relatively small Axis concentration from Libya. In the meantime, the Far Eastern conflict is diverting shipping and war supplies which might otherwise have gone to Egypt. The circumstances therefore appear propitious for an Axis drive on the Suez Canal, accompanies by heavy air attack on British fleet units in the Mediterranean. Such an operation would require an extensive air and troop concentration and would tax severely Axis shipping facilities; but it does not seem out of the question even in conjunction with heavy engagements in Russia. The advantages to the Axis of control of the Mediterranean and of the African approaches to Europe are very considerable. Egyptian cotton would remedy the serious Axis textile shortage. Cobalt, olive oil, and phosphate fertilizer, now flowing irregularly from French North Africa, would move unimpeded. Turkey, cut off, like Sweden, from intercourse with other powers, would undoubtedly export chrome, wool, tobacco, and foodstuffs overland to Germany. Hitler would thereby have brought Turkey into the German economic orbit without having risked the uncertainties of a difficult campaign. It appears unlikely that the Axis, in control of the North Africa littoral, from Suez to Tunis, would experience serious political or military difficulties in occupying Northwest Africa. With the whole North African coast in its hands the most feasible bridgeheads to Europe would be denied to the Allies, and important 00011363.gif page 9 new bases for attack on Allied shipping could be brought to bear. On the whole, the advantages to the Axis of control of the Mediterranean would seem to justify a large-scale expenditure of resources. And since offensive operations against Russia can not begin until April, a Mediterranean campaign, immediately undertaken, need conflict little with the later offensive. THE MIDDLE EAST The Middle East - Iran and Iraq - plays a complex role in the German strategic position. It is, first, a major source of oil. But if the Caucasus is successfully occupied by Germany, the oil fields of the Middle East will not then be an economic objective of immediate importance. Second, the Middle East represents a potential base for attack on Europe. If Hitler acquires the Caucasus and the Mediterranean, however, its importance in this respect will be virtually neutralized. But the oil fields of the Middle East serve also as a major source of supply to Allied naval and merchant vessels operating in the Indian Ocean. The loss of this source, if combined with the loss of Far Eastern oil supplies, would weaken the blockade in the area, facilitate trade with the Far East, where Japan now holds rubber and tin supplies badly needed by Germany, and isolate China and India after the manner of Turkey. It is, then, as part of a pincer movement on Allied oil supplies in the East that Germany is most likely to undertake a campaign against Iran and Iraq. The German arm of this pincer is not likely to be attempted, however, until the Mediterranean and Caucasus campaigns are completed and new bases consolidated. It 00011364.gif page 10 involves, at least, extended and tenuous lines of communication as well as long and vulnerable flanks. It is not a campaign essential to the German plan as outlined earlier. It hinges on the success of previous German and Japanese operations. CONCLUSIONS It is judged to be Hitler's aim in 1942 to master an area as impregnable as possible to Allied attack, and capable of maintaining a continuously high war potential. This end can be virtually achieved by (a) the conquest of the Ukraine and the North Caucasus; (b) a further considerable advance on the North and Central fronts in Russia, which would, at the same time, seriously weaken Russian strength and willingness to resist; and (c) the conquest and occupation of the areas bordering on the Mediterranean. The results of such an achievement by the Axis would be so disastrous to Allied interests as largely to nullify the advantage in armed strength expected in 1943. Aggressive measures are imperative at the earliest possible moment. Our alternatives, like Hitler's, are two: (1) To strive for decisive victory in 1942. (2) To prevent Hitler from achieving his goal of impregnability this year. We cannot wait for out increased war production to become effective in 1943 and thereafter. The first alternative could be accomplished only by successful invasion of the European continent. This is regarded as impossible by American and British military authorities. It is therefore essential that Allied strategy be focused on achieving the second alternative. 00011365.gif page 11 The general priority of Allied counter-action would appear to be: 1. Quickly effective aid to Russia. The quantities of immediately useful military supplies sent to this area should be limited only by the capacity of Russian ports to discharge and dispatch cargo. The existence of an eastern front in 1943 is essential to Allied success. 2. The maintenance or acquisition of bridgeheads to Europe on the North African coast. If Egypt can be held, the conditions for an Allied offensive in Europe are immeasurably improved. 3. Aid to China and to the Dutch, in an effort to prevent the denial of Far Eastern oil to the Allies and the opening of commercial shipping lanes between Japan and German controlled areas. Only the immediate contemplation of a large-scale offensive in the west would justify the continued shipment of men and materiel to Britain at the present time in competition with the program indicated above. The importance of shipping to above objectives is obvious. Equally clear is the need to give ship-building high priority in our production program.
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