Mussolini dies in July 1940

That is a very interesting idea. Assuming these negotiations go ahead do you think it is more likely we will see a neutral Italy or Italy swinging over to the Allied side?

(Although to be honest I'm still not sure Britain would be entirely happy with leaving at least half of the Mediterranean in a neutral state, not when they are in a position to totally defeat the Italians in Libya and Ethiopia.)

Well the victory on Africa from a TTL PoW are not a given and frankly all the resources deployed here can be used for more important front (Europe and Battle of Britain) and keep on the Pacific, basically a Italy who after some months of a phoney war equivalent return to neutral state is a godsend for Britain in this moment so Churchill will not spit on it.
 
Lets assume that the UK makes peace which I think at the moment is very likely to happen and there is no invasion of Greece, no coup so Yugoslavia joins the Axis and Italy sends some forces to fight in the East, but not as many as Mussolini did and Yugoslavia helps fight in the East as well.

The German attack on Russia happens a little bit earlier, but not in May. With the added forces (tons of German trucks, 1/6th the German air force, and so many German troops) not diverted elsewhere Leningrad falls in the summer of 1941.

The tempo of operations just with the added planes, trucks and tanks would allow for Leningrad's fall even without the slightly earlier date. The real question is Moscow and its a flip of the coin IMHO if the panic from the fall of Leningrad and an faster moving Germany Army convinces Stalin to do as a previous Russian leader did and burn Moscow and move the capital East to conduct the war. The Soviet leadership and the population of Moscow OTL was in a panic in September and October, its going to be a much bigger one here.

How that effects the long term effect of the war if Italy is at least not fighting England and Leningrad and Moscow have fallen are hard to predict. Lead Lease might not even be given to the Soviet's in this case in any real quantity as Washington might write them off. That might effect Hitler's decision to declare war after Pearl Harbor... or not. A lot of potental changes from this one event.
 
Do you think it would be over so quickly? I'm inclined to think Italy will need to go along with the alliance even for the sake of honour. After so many years of fascist propaganda they probably don't even realise how weak they are.

I think that most of the top Italians understood that Italy was weak and could not play a really powerful role.

Once it is clear that Britain is not going to make peace, Italy is going to start worrying about its colonies. That is maybe late September.

Italy probably would not dare to make an explicit peace with Britain. However, Italy might offer a covertly agreed truce with Britain. No
further Italian advances, and Britain ignores Italian positions. No air/naval attacks. Hitler won't like it, but he can't afford to start a new war. Possibly Italy gets to import oil and other necessities - through French North Africa?
 
Is an Italian Greece invasion still possible, although perhaps with more forward planning and adequate preparations than the OTL debacle?

I doubt it. IIRC Musso decided to invade Greece because he wanted to show Hitler that Italy was strong. The fact that Greeece might possibly object rather strongly doesn't seem to have occurred to him.
 
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