With reference to my minute of yesterday, 12th May,¹ I have to state, for the information of the Minister, that at the private meeting of the Council which was held before the public meeting, the Secretary General informed the Council that Baron Aloisi, the representative of Italy, had notified him that he had received instructions from his Government to leave Geneva at once, together with the Italian delegation. The instructions received by M. Aloisi were of a summary character, and the Italian representative had no information to give beyond the mere notification.

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There was naturally much speculation as to what exactly the Italian withdrawal signified - were they leaving the League, or were they merely withdrawing from Geneva until such time as they might not have to look at the Ethiopian representative across the Council table? The general view in Geneva is that they are not withdrawing from the League, at present at any rate. Many think that if Germany looked like coming in, Italy would not like to be out, but that if Germany, after the negotiations on the Rhineland question, came to a decision to remain a non-Member, Italy might then come to a decision also. It is said that Italy recognises that she has rather shocked French interests in north Africa by her annexation of Abyssinia, not to speak of the shock to British interests, and that she has not now much hope of the reconstruction of the Stresa front.² She is therefore once again inclined to look towards Germany, as a threat, if Germany finds it possible to reconcile such looks with Italian promises to Austria. It is all very difficult, but Italy feels that she has good cards to play, and she is trying to play them at the appropriate times. So far as British interests are concerned, a member of the British delegation, whom I met at dinner last night, told me that Britain does not expect any immediate trouble with Italy in connection with Italian control of Lake Tana. It would, he said, be an amazing feat of engineering to divert the head waters of the Nile to other Italian regions, and he thinks that it will be time enough to talk about such a danger when it is threatened. He thought that the greatest safeguard of peace is that Britain should be ready, and he made no secret of the fact that she is getting ready. There is no doubt however that the position in regard to Britain's route to India is serious. A glance at the map shows how serious it could be in case of war, not to mention the statement made recently by the South African Minister of Defence regarding the future importance of Capetown in view of the new circumstances. Therefore, while a deal regarding the head-waters is possible, the threat to the British route to the East is likely to remain.³

Opinion here in regard to the European situation continues to be nothing but pessimistic. The Polish representative told me a few days ago that he feels certain, now, that Europe is going into war, but that it may not happen for about two years, unless some serious incident happens to provoke it prematurely. The German Consul General states that Germany is greatly afraid of an incident being engineered in Austria or Czechoslovakia which would be made the excuse for a conflict. He said that Germany herself has not the slightest intention of doing anything rash at the present time, that her policy will be one of patience and firmness. I should mention that, when speaking of Austria, the member of the British delegation expressed the view that in no circumstances will Great Britain take part in a war in connection with trouble in Austria or Czechoslovakia, whether such trouble is engineered from within, or comes from outside, those countries.

The attitude of the U.S.S.R. on the Abyssinian question has attracted some notice here. It is said that, for the Soviets, Ethiopia has become a side issue, and that they are now more concerned with the defence of the Brenner, in other words with securing Italy as a party in the encirclement of Germany.

The seven 'ex-neutral States' are waiting on events - the attitude of France and Great Britain, etc. - before committing themselves to any particular policy either with regard to Ethiopia or the Rhineland question. On the question of the reform of the League, which the British think may come before the next Assembly, the neutrals lean towards the side of the reform of the Covenant with a view to the elimination of sanctions. I am informed confidentially that they have come to think that sanctions are not really a practical policy - they are naturally keeping in mind the possibility of sanctions being demanded some time or other against a big central European State - and, therefore, if there is to be any reform, they think it should be in the direction of eliminating the coercive factor. They would prefer that the League should be an organ for general international contacts, conciliation,⁴ arbitration and the like, an organ to prevent war rather than an ineffective organ to endeavour to stop war. But I gather that they do not intend at present to propose re-organisation themselves, but have decided provisionally on their policy should re-organisation be proposed by others. I shall report more fully on this matter later.