'Gray' (ii) was the US contingency plan to take the Azores islands group, a Portuguese possession, as part of the overall scheme to seize the Atlantic islands of Spain and Portugal in the event that the two countries wavered from neutrality toward the Axis cause or that the islands were invaded by German forces (1941/42).
In the first and middle years of World War II there was a very real fear in the Allied camp that Germany would quickly seize the any or all of the Atlantic islands for itself should Spain and Portugal veer toward the Axis, providing German maritime patrol aircraft and submarines with ideal bases for more devastating attacks on Allied shipping. The Azores islands group was handily placed for control of the sea routes across the North Atlantic, while Madeira and the Canary islands group could back the Azores to interdict Allied supply lines and invasion convoys heading for North-West Africa for the planned 'Torch', and the Cape Verde islands dominated the routes round the western coast of Africa along which passed all the convoys carrying reinforcements for the Middle East, India, South-East Asia and Australasia.
As early as the spring of 1940 President Franklin D. Roosevelt had become very anxious about the possibility of a German seizure of the Azores group, whose islands lie athwart the vital shipping lanes between the USA and the Mediterranean, and between Europe and South America. While the US Army considered the islands to be of little value in western hemisphere defence terms, their real significance was more significantly measurable by their value to Germany. From air bases and naval facilities in the islands, German warplanes ands U-boats could sortie after the bulk of British shipping. The deep US concern for the safety and integrity of the islands led to a series of discussions with both the British and the Portuguese.
By October 1940, US Army and US Navy planners had created an initial plan for a surprise seizure of the Azores islands group. The plan was based on the landing of one reinforced division, but was nothing more than a pipe dream as the US Army did not have the necessary troops, and the US Navy lacked the shipping adequate for the transport and support of a landing force. Moreover, at this time it was contrary to US policy to become involved in a European war.
By May 1941 intelligence estimates from Europe again indicated the possibility of a German movement into the Iberian peninsula, leading to the possibility if not the probability of a German occupation of the Azores and adjacent islands. On 22 May Roosevelt directed the US Army and US Navy to draft a new plan for an expedition to occupy the Azores.
This 'Gray' (ii) plan, which was approved by the Joint Board on 29 May and later redesignated as 'Vault', provided for the US Navy to deliver and support a landing force of 28,000 combat troops provided in equal numbers by the US Army and US Marine Corps. The expeditionary commander was to be Admiral Ernest J. King, and Major General Holland M. Smith of the USMC was to command the landing force. During the last week of May 1941 it seemed that the USA’s next military step to deal with the Atlantic crisis might be the dispatch of US ground and air forces to protect either the Azores islands or north-eastern Brazil.
After Roosevelt asked Secretary of State Cordell Hull on 16 May to establish Portugal’s attitude about the defence of the Azores islands group, the Department of State first consulted with the UK, as Portugal’s oldest ally, to determine its reaction to the president’s proposal. At the request of the British ambassador, Lord Halifax, the Department of State agreed to let the UK make the approach to the Portuguese leader, António de Oliveira Salazar, to discover what his government proposed to do in the event of a German attack and whether or not he would be receptive to the idea of a temporary protective occupation of the Azores islands by US forces. On 22 May, before answers to these questions had been received through the British, Roosevelt directed the US Army and US Navy to prepare a joint plan that would permit an expeditionary force sufficiently strong to insure successful occupation and defence of the Azores islands group under any circumstances, and ready for despatch within one month.
For some months the two services had been considering such a requirement, and had drafted the first informal joint plan in October 1940. At a time early in 1941, the Army War Plans Division, in reviewing the earlier plan and assessing the current situation, had concluded that a US occupation of the Azores islands group was not essential to hemisphere defence and should not be undertaken unless the USA openly entered World War II in alliance with the UK. Although the Azores islands group lies athwart the shipping lanes between the USA and the Mediterranean and between Europe and South America, the US Army considered it too far north in the Atlantic to be of any value as a defensive outpost against a German approach toward South America via Africa.
The Azores islands group had a much greater potential strategic value for the UK than for the USA since, in the event of a German seizure of Gibraltar, it would provide the British with an alternative naval base from which to cover the shipping lanes in the eastern Atlantic.
At the beginning of 1941 the Azores were virtually defenceless, and the US Army planners believed that the chief threat to any US forces based in the islands would be from German air power based in France. Air defence of the Azores would be difficult since, at the time, the islands had no airfields capable of handling modern warplanes. Under the 'ABC-1' war plan, the Azores and the other Atlantic islands (Madeira, the Canaries group and the Cape Verde group) would, in case of open war, fall within the British area of primary responsibility, although US naval forces might be requested to assist the British in the occupation of the Azores and Cape Verde island groups. Until Roosevelt issued his directive of 22 May, neither the US Army nor the US Navy anticipated that the former’s troops would be called upon to help secure the Azores islands group.
Roosevelt and the US Navy knew that the British had developed contingency plans for the occupation of both the Azores and the Cape Verde island groups as soon as possible after any German move into Spain.
While Major General Norman D. Cota’s 1st Division of the US Army was earmarked in mid-May for any expeditionary move the Azores islands group, as well as many other possible operations, there had seemed little likelihood of employing it for this purpose. Roosevelt’s order of 22 May led to hasty US Army and US Navy planning during the next five days to create the proposed expeditionary force and arrange for it to receive as much preliminary training as possible. One of the principal difficulties was to find enough shipping suitable for the transport of the division.
As finally worked out, the plan called for an expeditionary force of 28,000 troops (half army and half marine) with strong naval and naval air support. Cota’s 1st Division and Smith’s 1st Marine Division were to supply the infantry contingents. To move the force would require 41 transport vessels and other non-combatant vessels. The expedition was to be commanded by King, as the commander-in-chief of the Atlantic Fleet, and the landing force by Smith.
At first, the services planned to send 12 combat landing teams (nine marine and three army) to the northern coast of Puerto Rico for joint amphibious training. On 26 May this idea had to be abandoned because of an inadequacy of shipping to carry the troops to and from Puerto Rico. Instead, limited amphibious training exercises were to be held at places on the Atlantic coast closer to the Azores, namely Buzzards Bay, Massachusetts, in the case of the 1st Division’s combat teams. The shipping shortage was thereby solved, but the ammunition supply was certain to be short of estimated requirements. Nevertheless, by 27 May the general terms of an Azores expeditionary force plan that could be executed in time to meet the president’s deadline of 22 June had been agreed.
The planners thereupon drafted the 'Gray' (ii) formal joint plan which the Joint Board approved on 29 May, though an effort also to get Roosevelt’s approval on the same day failed. In considering the Azores and Brazil projects, US Army planners had to bear in mind the qualified commitment already made in the 'ABC-1' agreement to send forces to the UK and Iceland some time after 1 September 1941.
Current and prospective shortages of air and anti-aircraft artillery forces, and of ammunition, made it appear unlikely that the US Army could carry out effectively more than one of these projects before a time early in 1942. As between the Azores and Brazil proposals, only the latter would be of direct advantage in hemisphere defence. The Azores operation would detract much more than the Brazilian undertaking from US ability to carry out the 'ABC-1' commitment.
However, while these preparations were being made, other factors developed and altered the original mission of the mixed force. Portugal was opposed to a US occupation of the Azores islands group, and US planners became increasingly preoccupied with the threat of German efforts to take control of South America, most particularly Brazil. The succeeding weeks witnessed a change in both the urgency for the Azores operation and in the mission of the marine complement of the Azores force.
During the early part of June, intelligence sources in Europe produced credible evidence that Germany did not plan to invade Spain and Portugal, but intended rather to attack in the opposite direction, with the USSR therefore Hitler’s next objective. The forecast of the German plans put an end to US fears for the safety of the Azores, and permitted the diversion of the plan’s marine element to the replacement of British forces as the garrison of Iceland.