Your telegram No. 638, Middle East. [1] I am completely in accord
with your view and have felt ever since the final evacuation from
France that our position in Egypt and the Middle East was in grave
danger. Egypt and the Canal can be accepted as Italy's main
objective in this war and a successful attack would give
spectacular and far-reaching results, involving not only our
elimination from a vital sphere but endangering our interests in
Iraq, Iran and India, as well as giving encouragement to Japan for
acts of further aggression.

Until we received cablegram Z. 168 of 3rd July [2] giving actual
British strengths and dispositions we were under the impression
that there were substantial forces stationed in this region.

Despite ten months of war and imminent entry of Italy at any stage
it was disquieting to learn that by July forces in occupation
constituted little more than peacetime garrison requirements.

It is to be hoped the steps you indicate are now being taken can
be put into effect before the offensive which is presaged by
present enemy activity.

MENZIES