Was von Manstein's Lack of Success at Leningrad (and later Stalingrad) due to the failure of German military intelligence?

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The destruction of Sevatstapol was the Germany military's first great blunder "relatively speaking" in World War 2. First off, Manstein had annihilated a massive Red Army counteroffensive on the Kerch Strait, which was perhaps the German Army's greatest victory in the East. However, he either failed to convince Hitler or just was a moron by not demanding Sevatstapol simply be "sealed off" like Leningrad, so that the focus could remain on Case Blue and the taking of the Caucuses which after Bustard Hunt was now open for the taking.

For that Von Manstein must take the blame, as the loss in men and material in taking Sevatstapol was not insignificant. Not only that but, when the tide turned, there was now no way to defend Crimea from the East, as Von Manstein had destroyed that option. Those were very good defenses.

I doubt Sevastopol would have lasted the Summer of 1942 under siege and the Kuban was perfect tank country for the defense of "new Geman possessions in the Caucuses." That would have cut off oil to Russia and, in my view, threatened a total collapse of the Russian front; since Army Group Center was still at full strength in 1942, Leningrad completely surrounded and instead of one Group in the South Hitler would have had two.

Since the bulk of the Russian offensive had been directed and defeated in the South in the Spring of 1942, "had the plan been followed", I think indeed Russia would have been knocked out of the War. The only "good news" for the Allies in that Year was the Battle of Midway...Stalingrad would not be decided until 1943.

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First of all, Hitler micromanaged the war, so we are not talking about nebulous "Germans" here. He personally decided on virtually every significant strategic movement of the war and even a lot of small tactical decisions. After 19 December 1941, not only was Hitler approving all decisions, he dismissed von Brauchitsch and promoted himself to Oberkommando des Heeres, so he was actually personally issuing the actual orders, not just making the decisions.

Hitler's decisions were often motivated by political, economic or other non-military considerations. For example, Mannstein's "success" that you cited, the invasion of the Crimea, was largely motivated by the desire to stop Russia air raids on Ploesti which were coming from the airfield at Sevastopol. By any rational metric it is hard to see how stopping those raids was worth the enormous expenditure of time and materials into the Crimean campaign.

When intelligence assessments conflicted with Hitler's goals and desires, he simply ignored them. For example, in Chapter 13 of "Inside the Third Reich", Speer describes a case in which an analyst had delivered reports to the General Staff essentially proving that the American capacity for aircraft production dwarfed Germany's to such an extent that it was indicative of certain defeat, just on the basis of airpower alone. This report was brushed aside and ignored, leaving the analyst in tears imploring Speer to do something about it. This sort of total disregard of negative intelligence was a routine occurrence.

The failure to capture Leningrad was not due to any single factor, despite what Shirer may have surmised, but to a wide range of complex military and economic realities. Manstein, in Chapter 10 of his own book described the situation as hopeless due to a combination of the difficult terrain and the lack of sufficient men and ammunition for what have been required to achieve victory over the enemy.

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William L. Shirer in the "Rise and Fall of the Third Reich" and Walter Kerr in "The Secret of Stalingrad" allege that Germany military intelligence underestimated the available 1942 Soviet troop strength by 1-2 million men.

The problem is we don't have reliable information about Red Army's strength even now. So how to say whether German intelligence's estimates were right or wrong? Though I have to admit that considering intensity of Soviet mobilization in 1941-42 such possibility cannot be ruled out. So, well, the answer is "maybe yes, maybe no".

only the "fortuitous" transfer of Manstein's 11th army allowed for a German "draw" rather than a loss

Well, the word "draw" should be definitely put inside quotes. It was rather German victory, and Manstein's transfer came to be useful for them. But in Soviet and Russian historiography there's a prevailing point of view that Red Army's offensive operation was planned badly, so chances are that Germans could repel it even without Manstein's divisions.

even if Manstein's 12 divisions had been sent to the Caucasus (or to relieve Stalingrad) that they would have been a "drop in the bucket"

Definitely not. The situation on the southern front was highly dangerous, and such significant reinforcement potentially could make the difference. Again, in Soviet and Russian historiography there's a strong believe that the battle on the northern front, albeit unsuccessful, helped to hold the southern front.

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