a. Continuous attacks on Russian naval forces in Leningrad and Kronstadt by Army artillery and the Luftwaffe.

b. Conquest of the islands in the Gulf of Finland in order to get operational bases for a tight blockade of Kronstadt Bay. An agreement was reached with the Army, whereby Army troops are to seize the islands. The Navy will then take over and be responsible for holding them.

The Führer concurs in this opinion.

See Annex 1 on Transportation of S-boats.

4. Western Area: Due to lack of strength, our naval and air forces are, at present, largely limited to defensive operations on the Atlantic coast and in the Channel. The enemy is hampering our transport operations by the increased use of mines, by air raids and S-boat attacks. This forces us to confine convoy movements as well as patrolling and minesweeping activities to the hours of night.

Steps are being taken to provide more effective patrol of coastal waters by increasing the patrol forces. Likewise, our locating facilities must be improved and our coast artillery reinforced. The offensive operations of our S-boats and aircraft against the very extensive enemy convoy traffic along the English coast are of particular importance in the face of our otherwise purely defensive situation. We must try with all our might to intensify these operations as much as possible. Unfortunately the weather greatly hampers S-boat operations during the winter months. The Seekriegsleitung considers it urgently necessary to leave at least two S-boat flotillas stationed in the Channel area. Otherwise even our defensive operations are jeopardized. Aerial mines must be used more extensively in large-scale attacks.

5. Atlantic: Submarine warfare in the Atlantic produces good results at the present time. (See Annex 2.) In the war against enemy shipping everything depends on the number of submarines available. Time and again Churchill speaks of shipping tonnage as his greatest worry. Britain and the U.S. are building 7,000,000 BRT in 1942, which means that Germany and Japan will have to sink a monthly total of 600,000 BRT to offset this increase. This will become possible once the Japanese war against enemy shipping in the Indian Ocean gets under way. If the number of workmen had remained the same after production was adjusted to the cut in the raw material allotment and after manpower had been redistributed between repair work and new construction, our monthly output of submarines would have dropped to about 19 or 20. Since, however, many workmen are still being drafted into the Armed Forces, this figure will drop to 16 or 17 in the course of the year. This is entirely inadequate. No improvement can be expected at this time.

6. Mediterranean: The most significant factor at this time is that not a single heavy British ship in the Mediterranean is fully seaworthy. The Axis rules both the sea and the air in the Central Mediterranean.

However, enemy submarines still menace our shipping, there still is a shortage of transport vessels and escort forces, and the oil situation continues to be critical.

The Mediterranean situation is definitely favorable at the moment. In conjunction with events in East Asia, it gives us some indication of the possibilities if we were to launch an attack on Egypt and the Suez Canal just as quickly as possible. Except for Singapore, the British position is at present weakest in the North Africa-Suez area. Attention is called to the change of Government in Egypt. The British position in Egypt is precarious because Britain has to depend on the 40,000 Egyptian troops to safeguard her rear communications.

a. Mediterranean Shipping: An agreement was reached with Italy concerning transport vessels for the Mediterranean whereby we will get ten transports to begin with. The Italian Minister of Transportation is still objecting to the transfer of another ten; he claims the need of this tonnage for his own war construction program. According to the findings of our representative, Dr. Scholz, Director of the German Shipyard Company (Deutsche Werft), however, this tonnage could easily be made available. Likewise difficulties are being encountered concerning the chartering of Italian vessels for war purposes, since the Duce has to be consulted in every instance.

The Commander in Chief, Navy, requests that these points be mentioned, should the Führer decide to write to the Duce. He will submit a draft, if desired.

The Führer agrees.

7. East Asia: Rangoon, Singapore, and, most likely, also Port Darwin will be in Japanese hands within a few weeks. Only weak resistance is expected on Sumatra, while Java will be able to hold out longer. Japan plans to protect this front in the Indian Ocean by capturing the key position of Ceylon, and she also plans to gain control of the sea in that area by means of superior naval forces.

Fifteen Japanese submarines are at the moment operating in the Bay of Bengal, in the waters off Ceylon, and in the straits on both sides of Sumatra and Java.

With Rangoon, Sumatra, and Java gone, the last oil wells between Bahrein and the American continent will be lost. Oil supplies for Australia and new Zealand will have to come from either the Persian Gulf or from America. Once Japanese battleships, aircraft carriers, submarines, and the Japanese naval air force are based on Ceylon, Britain will be forced to resort to heavily escorted convoys, if she desires to maintain communications with India and the Near East. Only Alexandria, Durban, and Simonstown will be available as repair bases for large British naval vessels in that part of the world.

The Suez and Basra positions are the western pillars of the British position in the Indian area. Should these positions collapse under the weight of concerted Axis pressure, the consequences for the British Empire would be disastrous. An early German-Italian attack on the British key position of Suez would therefore be of utmost strategic importance. Such an undertaking, if successful, would completely solve all our Mediterranean problems; it would have far-reaching effects on such matters as the Mosul oil fields (!!), the attitude of Turkey, the Near East, the Arabian and Indian nationalist movements, the Eastern Front, and the Caucasus. According to reports available, the British themselves are fully aware of the great danger which is threatening them in Egypt. They fear that the German-Italian forces might establish contact with the Japanese. The Japanese, on their part, are making an honest effort to establish contact with Germany by sea and by air since they realize the decisive significance this would have on the outcome of the war.

8. Request for cancellation of Operation "Seelöwe". A decision is requested to what extent the commitments of personnel and materiel for operation "Seelöwe", which are still very considerable have to remain in force. Since the operation cannot possibly be carried out in 1942 it is proposed that all commitments be cancelled if at all permissible from a military point of view. Thus urgently needed personnel and ships such as landing craft (MFP), tug boats, etc., can be used in areas of strategic importance at the present time, for example in Norway, and in the Baltic, Mediterranean, Aegean and Black Seas. The Commander in Chief, Navy, requests that the period of time required for the preparations of operation "Seelöwe“ be lengthened from eight months to twelve months.

The Führer gives his consent.

9. Repair of Cruiser LEIPZIG. Repairs to Restore the Speed of the Cruiser LEIPZIG.
At the present time the cruiser LEIPZIG has only two boilers functioning instead of the usual six. The four missing boilers still have to be installed. This will take seven months. Furthermore, of the 135 kilometers of cable which were damaged some time ago and which affected primarily the operation of anti-aircraft artillery and the torpedo weapons, only 30 kilometers have so far been re-installed. The re-installation of all the cable will require twelve months, in addition to a preliminary period of four months needed for procuring the switchboards and other electrical equipment. Installation of the cable necessitates the services of one hundred and seventy electricians for a period of twelve months.

Since the boilers cannot be placed prior to the laying of the cables, the period required for the over-all job will be determined by the time it takes to complete the electrical installations. It is roughly estimated that an additional month will be needed for miscellaneous repairs.

At present the ship has s maximum speed of 21 knots when both boilers and the cruising engine are used simultaneously. The Commander in Chief, Navy, requests that the idea of completely renovating the LEIPZIG be dropped. The cruiser is urgently needed as an artillery and torpedo training vessel, for which a speed of 21 knots is sufficient; it would therefore hardly be worthwhile to use up raw materials as well as shipyard facilities and workmen for one year.

The Führer agrees.

Annex 1

Preparations are made for the transfer of six S-boats to the Black Sea via the super highways (Reichsautobahn) and the Danube. The boats are to be dispatched as soon as ice conditions on the Elbe River permit - about the middle of March. Unless adverse weather conditions delay the transfer, it is expected that the six S-boats will reach the Black Sea ninety days after leaving Kiel, i.e. by the middle of June.

The shipyards at Linz have no facilities for building S-boats. It would take at least three months of preparations before construction of the first boat could begin.

There are no workmen in Linz with experience in building S-boats. Such workmen would have to be withdrawn from the two North German S-boat yards.

The construction of a S-boat, from the time the keel is laid until commissioning, takes six and a half months in a shipyard where production is in full swing. In Linz, construction of the first boats would require approximately eight months. This means that the first S-boat would not be ready for commissioning until the middle of January 1943 at the earliest, provided all necessary preparations were begun at once. Therefore mass production in the North German shipyards is preferable. If necessary, additional S-boats can be transferred to the Black Sea this summer.

The Führer agrees.

Annex 2

I. For location of the submarines see annexed chart. (Not incl.)

II. Number of operational submarines . . . . . . . . . . . . . . . 106

These are distributed as follows:

1.	In ports a. In western France b. In Kiel	32 29 3
2.	In the Mediterranean a. In the zone of operations (Cyrenaica Coast) b. Returning from the zone of operations c. In Italian ports	21 5 4 12
3.	In the Norwegian and Scotland-Iceland areas a. In the Arctic Ocean b. In Trondheim c. Northern Scotland and Iceland d. In the northern North Sea en route to zone of operations, later to be put into action off North America	18 6 1 7 4
4.	American Coast a. In the zone of operations b. Returning from zone of operations c. En route to the zone of operations (5 of these to the West Indies)	35 9 14 12

III. Losses:

Total: 73 (losses in January: 5, 4 of them in the Mediterranean)

Monthly average now 2.5.

IV. Further Plans:

1. By the end of February the number of submarines will be as follows:

a. In the Norwegian area: 12
b. In the Scotland-Iceland area: 8
Total: 20