I find this TL fascinating for reasons others have given--a very neglected POD, with major (though in a sense limited) consequences to divert WWII considerably for one thing. Perhaps more factionally and controversially I certainly have a strong sentimental wish that the Loyalist/Republican side had won the SCW and quite a lot of detestation for Franco, so it is gratifying to know his comeuppance is here foredoomed by the middle of the decade rather than 30 years later, if indeed he is not caught by some partisan patrol or shot by an assassin before his Falange is destroyed completely.
And I also find the thread is mainly carried by your own authority as author, and in general I have to defer to your opinions and decisions because it seems evident you know your detailed stuff when it comes to Spain in the decade 1935-1945.
It is only that deference that lets me swallow the POD itself--for while I don't doubt Franco was hardly a genius nor credit him with good will of any kind, still OTL it seemed evident he was intelligent enough to realize that at best Spain would suffer badly before being redeemed by any open and unambiguous Axis alliance no matter how much he might have both expected and hoped Hitler would indeed triumph.
Yet I think you've made the case he would not have to be handed any ASB Idiot Balls to impulsively decide to do it anyway, in the hope and expectation of Spain (the part of his nation he cared about anyway) would prosper by joining the winning side and striking while the iron is hot. And certainly step one would be expelling the British from Gibraltar. Which phase I think you handled quite masterfully.
Now the situation is far too volatile, along the lines you've given canon guidance so far, for me to really visualize what happens next.
You've made it clear Spain (practically and realistically speaking, actually with the Wehrmacht doing the heavy lifting, much as in the Gibraltar adventure) pretty much has to invade Portugal, the only alternative as Hitler and Franco see it being to quickly persuade Salazar to burn his bridges with the British (now the Yankees too, but up to this point Portugal didn't have much to say one way or another to Uncle Sam I am aware of, you may know otherwise but it is the relationship with the UK that has history behind it, and at this early moment in US war mobilization, greatly dominates whatever limited forces the W-Allies have in hand) to also jump into the Axis bed and suffer the immediate consequences.
Quite aside from any personal differences or regime style distinctions between Salazar and Franco, what Portugal has to potentially gain versus what they will suffer and probably lose even if the Axis does prevail is much less than what Franco could hope for--the main reason Salazar would have to consider is whether Portugal can survive opposing the Axis in the short run at all.
If it were a straight and local war between Spain and Portugal in isolation, Salazar could hope perhaps to hold at least some of his land and maybe even to prevail, though that seems quite unlikely on the face of it--certainly Spain fighting to conquer Portugal on her own hook would have to pay a heavy price and even in victory, maintain a sullen and costly occupation. But of course it is actually the Reich forces Portugal must face, and though Hitler has every motive to economize on what he must send to Iberia, surely he will send in whatever it takes to secure and then hold both Spain and Portugal.
But Salazar I would guess (again you may know otherwise) would be very skeptical of the idea that Hitler, despite his late '41/1942 apparent roll, would win in the long run, and even if he guesses there might be some sort of "white peace", I don't think he'd reckon Portugal would rate any big favor points from Hitler, whereas in the case of such a truce, surely while the semi-victorious Axis would have leverage to gratify Franco (if only with the British having to sign off on having lost Gibraltar) Portugal would in that case lose her entire colonial empire, all of it. Even a semi-victorious Hitler would lack power projection to leverage anything outside of Europe itself, and even the closest of Portugal's overseas holdings, Azores and Madeira, would surely fall into British hands (possibly handed on to the Yankees, who would probably set them up as some sort of mini-republican federation), never mind the African and Asian holdings--at best, the Japanese might be persuaded to hand back East Timor and Macau--but really why should they, even assuming Japan is included in this unlikely "white peace" anyhow?
More likely if the Americans are going to throw in the towel in the European theater it would be to double down in the Pacific and it would be the Yanks or British who wind up administering Portugal's Asian-Pacific holdings such as they were.
All Salazar has to gain for Portugal in an Axis alliance is mere survival of the homeland, and that after being starved and battered. Even in the event of a total Allied collapse, of Britain and the checking of Soviet counter-advances at any rate, and a Britain cravenly signing off on the Axis getting carte blanche for naval global power projection (surely the USA won't agree, even if we were to judge ourselves unable to actively pursue opposing it violently for the moment), still Hitler is hardly a generous master to kowtow to. He'd be quite likely to take anything really valuable for Germany, never mind moral obligations to his stooges.
Anyway it is clearly a case of Victory or Death for both sides of this unconditional total war.
So even if Salazar underestimates the qualities of the US forces and supposes per his reactionary ideology the Reds too will be mowed down on the Eastern Front, at any rate Britain is not going to surrender while they can still get American supplies (not to mention those from their own empire, the parts the Japanese have not taken anyway, and the French colonies and everyone else's too). Even supposing the Yankees remain easily demoralized and confused clowns, there will after all be a whole lot of us coming by and by, in relative material luxury too.
What would be best for Portugal would be to remain neutral for now. Then switch to an Allied status once it becomes clear the W-Allies are both going to win the war and have enough to spare to make a DOW against Hitler Franco and gang something some of Portugal might survive the inevitable counterinvasion from Spain to be sure, but clearly not in January 1942!)
And if Hitler at least, never mind his lapdog Franco who will heel as told to, were to look at it most cold-bloodedly, he would also favor letting Salazar stay on the neutral fence, for with Franco throwing away the benefits of neutrality for Spain, leaving Portugal at least neutral gives some window onto world trade. Of course, versus OTL with both Iberian nations legally out of the fray, the W-allies (practically at this point, the British) must tighten up the blockade, because trade that was grudgingly allocated to Spain through either Spanish or Portuguese ports must now be dried up completely and Portugal herself, neutral or not, must go down to half-rations because of course the Allies are certain Hitler will strongarm Salazar to release much of what Portugal minimally needs, to feed both fascist beasts, the great Reich and its pathetic and now totally isolated sidekick Spain too.
Mind, I can see why, aside from his maniacal arrogance and monomania, a cool headed Notler would be fairly likely to make a clean sweep of it and demand to rope in Portugal too. After all the whole premise of Axis strategy such as it was was to achieve quick and massive victories immediately, on the theory that their liberal and leftist foes lacked moral strength and would fold, and if they muddle-headedly resisted the superior race with its superior preparation for victory at all costs they would be eventually decimated and collapse perforce.
Hitler doesn't think his total victory in the East is all that far off at this point--the "rotten door" did appear to indeed crumble at the first kick, now he is a bit surprised to find yet more rotten doors behind the first one but he doesn't doubt yet (if he ever did) that they too will fall and sooner or later the Undermen will be at the disposal of the Supermen, it is just a matter of a year or two at most. He doesn't much care how much Spain suffers, they are at best a people with some possible candidates for proper Aryan status hidden among them in his racist view; such superior men among the half-men will surely have the strength to prevail and the more of the lower sort who are mowed down by hunger or order-keeping bullets or long tortures in camps, the better both for the Aryan Reich and for what part of Spain is worth worrying about.
A more pragmatic, less dogmatic German high command officer might not have Hitler's supreme confidence in destiny, but certainly on paper at this early phase of this war of Germany's choice, it looks like they are going to win it, in the Eurasian Heartland anyway which should once taken under ruthless German management supply plenty to overcome the British and Americans on the world's high seas (once the necessary fleets are built) and in the shorter run, the Bolsheviks are surely on the point of final collapse, the British are short in supplies and short-handed (again, such a staff officer will probably discount the value of manpower recruited from Africa and India--their mistake!) and the Yanks will require years to build up anything to worry about. So it might seem in a headquarters in Berlin.
So, the short term costs of repressing any Portuguese resistance, and foregoing any trickle of rationed maintenance supply a neutral Portugal might be allowed to import, and fending off British commando raids and so on, won't seem to weigh much versus securing that coast--which is IIRC pretty much what you said governed Axis decision-making. As seen from the palaces of Berlin or Madrid, Salazar will join up if he knows what is good for him, and if he doesn't--they will brush him aside. Quickly and decisively.
So naturally, I have been waiting for the canon post that finally describes, not in retrospect but in full as it happens, the manner in which the Axis does in fact move in and take the country. Of course I don't figure it will go exactly as smoothly for the Germans (surely the Spanish forces will be operating largely as sidekicks) as they think it will. I expect that Salazar will in fact rally some serious resistance and roadblocks, if only to buy himself enough time to escape to the Azores.
When I myself, without your intimate knowledge of details of who was what in Spain in this era, have tried to visualize my own versions of such a war (I never dared imagine Franco would blunder quite this badly, and figured a Spanish theater of the European war would have to involve a Republican victory and perhaps a number of French forces taking refuge there rather than surrendering under Vichy, so it is a different scenario) the main thing I wondered was, just what material help, with men or equipment, the British could possibly offer an anti-Axis resistance of any kind. My assumption was and still is that at a moment like this, the end of '41 and immediately after, there is pretty much nothing they can bring in, certainly not on a scale able to hold anything much against Hitler sending in whatever it takes to prevail as soon as possible.
OTOH, the British have already been engaged hotly at Gibraltar, and suffer for their losses there...but surely they have had some time to anticipate the next move and look into what sort of help they can give to anyone minded to resist.
I don't suppose Salazar can quite manage what the Kingdom of Norway did, and organize stay-at-home subjects of overbearing Reich power into a branch of the formal military as the Norwegian resistance, under the command of the Crown Prince, was commanded. And to be sure, while the Norwegian Resistance performed some quite noble and useful deeds, they generally avoided spectacular confrontations and played a long game of quiet espionage and sabotage.
Still with some British help, along the same lines as the agents sent in to make contact with and assist the Spanish guerrillas, despite occasional betrayals and collapse of will by some people treacherously undermining the rest, at any rate the Germans will find Portugal a bit hot to hold on to. And despite the motive of "finishing the Atlantic Wall" being foremost and decisive in undertaking this invasion in the first place, one of the major tasks of Allied aided Portuguese resistance would be to weaken and undermine that Wall, and leave some holes in it--some the Germans suspect and sit on, perhaps thus masking others they don't realize are weaker than they think.
Invading Iberia is not what I would write the Anglo-American leading powers decide to do assuming I ever imagined this incorporation of Iberia into the Axis. In my own more favored romantic idea of the Loyalists having prevailed and giving refuge to fleeing French forces, it would be different, because the pro-allied side would control the countryside and opposing the Reich forces would be a matter of trying to solidify the border with France, and containing and slowing any salient the Germans manage to push onto Spanish soil from northeast and northwest (figuring the middle of the Pyrenees might hold if refugee French and handfuls of British forces could suitably reinforce Republican Spanish forces there). I would figure, as some commentors have done despite your tipping the hand that there will indeed be a hot front in Iberia, that Portugal like Norway would be left largely alone, and let Hitler waste time and nervous energy as well as material resources and men bogged down there to oppose an invasion he feels in his bones must come there.
OTL Churchill himself strongly desired to make some landing in Norway and engage the Germans there, and of course romance and moral hopes would yearn to liberate the Norwegians ASAP despite their sins of omission of being so sadly unprepared to fend off the Nazi invasion--they paid in blood and misery for that, pretty heavily, and surely deserved better just for their staunch refusal, in the main, to be seduced by Hitler and Quisling offering to take them in as honored fellow Aryans. "Aryan" or not they retained, with remarkably few exceptions, decent human beings and paid a steep price for their goodness. And strategically there might well have been a rational case for choosing to start re-engaging Reich forces there alongside the gratification of liberating them. It certainly seemed so to both Churchill and Hitler!
And yet it did not happen, and when VE day finally came with Doenitz's surrender, the Reich was reduced to a skinny ribbon of territory--with masses of Italy at one end, and all of Norway (and Denmark of course) at the other. The Norwegians then activated their militarized Resistance as a disciplined army assisted by British forces to roll up both the stranded Reich forces and the few collaborators they had marked down on their lists, and by and large the Quislings and German criminals against humanity were arrested and detained pending proper trials which they got.
So by analogy I would have expected Iberia to be bypassed in favor of the war going much as OTL, as much as that would be possible with Gibraltar in effectively German hands. Of course the Reich doesn't have a surface navy to speak of already at this point, more of one than the RN liked of course, but they could hardly hope to move any of their cruisers or battleships down to there without the odds favoring their simply being sunk on the way, even hugging the coast.
As a naval port, then, Gibraltar is a pretty Pyrrhic victory for the Axis.
But what is really nasty about it is that it denies the Allies the air port they'd need to try to interfere with the Luftwaffe--and of course I can't imagine that had the British somehow been able to hold The Rock, that they could then base nearly enough aircraft to run nearly enough sorties on that limited airstrip to do more than annoy the dozens of bases the Luftwaffe could surround them with to even defend the port itself, never mind block them from a reign of airborne terror over the Strait. With or without a single man in Gibraltar itself, just as well as if Hitler could just have pushed a button sinking it into the sea to join Atlantis and deny it to everyone for all time, it is these Luftwaffe attack planes flying out of any airfield the Germans care to make anywhere in southern Spain, that is the real Axis strategic victory here.
Can the RN, or USN, run that gauntlet at all, never mind with low enough losses to make it worthwhile? Eventually perhaps yes, once there are a lot more carrier hulls to engage their airborne attackers and deny the Germans air superiority over the Strait, maybe.
But I guess I have in my dialectical manner convinced myself just why and how the W-Allies decide they will indeed contest the Axis on Iberian soil. The main thing is to root out those Luftwaffe airfields, and get enough secure airstrips of their own to bring in the RAF and USAAF.
As I foresee it now--it is all about Torch. I don't know enough about the details of Operation Torch to guide me too well, in particular whether it might be possible for the Allies to go south of the range of the Luftwaffe bases in southern Spain and concentrate on western Atlantic coast of Morocco and then slog overland east to take the southern shore of the strait and thus contend with the Germans in the air over it from those bases.
rBut given we are told the Americans and British will indeed be fighting it out on Spanish and Portuguese soil, I expect the Anglo-American planners conclude nope, that's not an option, and given that they can't do it with the Strait closed (not to mention, failing to cut out the chain of bases in Spain means the Axis planes can just deploy in Spanish held north Africa, and all across Vichy Algeria and over the Sahara for that matter) they must bite the bullet and invade Iberia somewhere to proceed. If they can secure a single lodgment somewhere on the Portuguese or southwest Spanish coast, and hold it (relying to an extent on Spanish and Portuguese resistance they can much better supply and coordinate if they have a base on the iberian mainland to impede German-Spanish initiatives) then the plan would be to include some airbases in the secured zone and confront Axis air forces, interfering immediately with their ability to interdict the Strait and then in time denying those bases one by one, presumably converting them to Allied ones and eventually open the strait completely--at that point, the Axis Gibraltar garrison can be contained and left to surrender or starve at their commander's discretion.
Regaining the Rock would be nice to have, but not at this point necessary, just so long as RN/USN/allied ships can proceed unhindered except by U-boats. Securing the coast to deny the U-boats any nearby safe ports would be a priority as well.
With this done, in theory Iberia could be put on a back burner, but in practice of course they won't want to merely hold a perimeter, and halting at that point would be a betrayal of whatever help the guerilla Resistance has given them, and of Salazar's presumed decision to throw in with the Allies the moment the Axis loses patience and comes in in force. Moral claims might have little weight in practice in this brutal war, but they tend to correspond to some pragmatic wisdom, and pragmatically the thing to do is follow through with whatever it takes to liberate all of Portugal and Spain, and if they can manage enough airbases and sorties to open the strait they surely must be in a position to do that.
Therefore I figure now, much of what went to Torch OTL is redirected here to land somewhere in the southwest, to drive a sweep across southern Iberia to first interfere with and then hopefully interdict the Strait from Axis air strikes. Then it would be necessary to delay Torch a while longer, to enable the Americans in particular to ramp up recruitment and training and stockpile more equipment and ammo to sustain the Iberian campaign while replenishing to enable Torch as well. But meanwhile once the Anglophone navies (with small numbers but valiant of various Allied naval forces, such as the intrepid Polish and Dutch submariners) at least eventually the Strait would be more effectively closed to German U-boats. (OTL the Med was a death trap for those subs, but they did a lot of damage before facing their doom one by one, so it is a tradeoff between lost OTL opportunities to take out a U-boat versus avoiding what those U-boats did before they went down, and anyway in the ATL there won't be any question--keep the U-boats out and trap any that are already in!)
I'm fond of airships by the way, and was very keen to learn that in WWII, eventually American blimps were moved (via Brazil to West Africa, the airships crossing that relatively short distance under their own power) up to the Med late in the European war to do minesweeping and the like. I'm thinking here they might be brought over, somehow or other, to operate out of southern Spain and North Africa right around the strait. (If someone doesn't know this, blimps were quite valuable in impeding the operations of U-boats).
Conceivably, Torch is bypassed completely, despite being the premise for invading Iberia in the first place, because obviously the Germans are going to fight as hard for their version of Spain as they did for their death grip on Italy OTL. Therefore the Iberian campaign will be a grim and bloody slog for initially green Yankee troops, and the seasoned but few British and allied divisions.
It could also be that perhaps, with lots of the OTL Lincoln Brigade volunteers again volunteering for their better supported rematch against the fascists, that a number of them will be routed to Spain and somewhat salt the new minted American forces with their experience on this same terrain quite recently. OTL Torch was where the American forces made their most spectacular rookie mistakes, including breaking and running....though even then, having giving their Axis foes a pleasant not-quite-surprise at this apparent display of the basic unfitness of a liberal society in the age of the fascist New Order, many of them gave them another much less welcome and total surprise by abruptly stopping, turning and shooting back, which was quite discomfiting to the I believe it was Italians in North Africa. Well, here in Spain they'd usually be facing Wehrmacht troops and even with that belated bravado taking even the Fritzes by surprise, they would suffer more for it. But perhaps some of these lefty ALB veterans will help make up for that, and prevent some units that did run OTL from running in the first place, and buck up the others who do run--get them to turn sooner, get them to stand harder, bring them up to speed more quickly now that they are actually listening with keenest interest in just how to survive and someday win.
For the Yanks in particular it would be a bloody slaughter at first, and if Allied logistics are not just overwhelming we might even be driven off again, though I infer from the foreshadowing that at least won't entirely happen. But the survivors will come back a lot tougher than before, yet another disconcerting surprise for the smug German officers and sergeants. And if Allied logistics are not so stupendous at first, they soon will be.
I suspect the Iberian campaign then will cost Eisenhower or whoever is running it a lot more than plans anticipated. But vice versa, for that to be true it has to be costing Hitler a lot more than he bargained for as well. If he does not allow it to deplete the Eastern Front more than Rommel and then the defense of Italy diverted OTL, I think the Axis would be on the back foot in Spain sooner (from the start of the campaign I mean, thus very much sooner than reaching a given benchmark in Italy) and lose ground more quickly than in Italy OTL--whereas if Hitler wants to try and hold that ground, and push through enough strike planes to deter the main Torch operation from being launched, he will be worse off than OTL on the Soviet front. And that being the case, presumably then the Russians do better sooner and the final eastern reach of Axis advance is farther west, and the rollback westward starts earlier and reaches farther west on any given date versus OTL. Which might have some bearing on the final post-war outcomes, perhaps it will be the West that gets the smaller part of Germany.
Then again, if the Eastern front is stalling and crumbling, surely Hitler will belatedly re-prioritize there and might even write off Iberia for the moment, resolving to hold at the Pyrenees pretty much, concentrating holding forces around Barcelona and whatever the town I can't be arsed to look up standing for the western end of the range is, with crack forces in small numbers holding the ridge line between and walling the Allies off from France in that direction.
Even so, Stalin has his Second Front he demanded so much OTL, two years early I guess. Even with the Germans holding that line economically and the Allies not yet ready to go around either end for quite some time, if Hitler must concede Spain and it and Portugal are liberated this early, while the manpower they offer to the war effort is not great and the material resources probably best measured in negative numbers, well logistics, supply, kit, ammo, even food are not something the Western allies are short of. After the turmoil of the past 6-7 years or so joining an Allied Spanish Republican (I am pretty sure it won't go to a monarchy however token and constitutional, not with none of the candidates having any kind of track record supporting the Allied side) or Portuguese state army would probably be the safest and most materially prosperous condition the majority of Spain's miserable subjects have seen in a long time, and those two armies would have rations and ammo and kit all given to them mostly from America. They will be experienced, and motivated; the mere defense of Spain's border might wind up safely entrusted to them while the rest of the Allies move on to other fronts.
Or they could just stay right there in Spain, with Portugal liberated behind them and a lot of Portuguese men and probably a fair number of women in their own uniforms right there with them, and mass up to break through, probably on the Mediterranean end though perhaps breaking into Gascony instead might have the merit of surprise I suppose, and start liberating France in the south long before OTL D-Day in Normandy.
Then too--if the Germans are hotly engaged in Spain and on the Soviet frontier, can they spare nearly as much to reinforce the "Atlantic Wall" where it is most needed around the English Channel? Surely they must try, but if they keep getting scanted perhaps one of the predecessor plans postponed to Overlord OTL can work due to weaker German fortification in the north because they are being bled in the south of France. Perhaps it will not be necessary to develop all the expensive innovations, Mulberries and so forth, to land on Norman beaches if it is possible to seize Calais instead? I would hardly want to count on it. But maybe?
So much depends on how Hitler reacts. I hardly think at this point already it matters what Franco or Mussolini might be moved to try, they will do as their German minders tell them to do and like it or else.
I have a few other points of deep interest to me, but your latest post partially answers one of them, with useful hints as to the range of possibilities of governance in liberated Spain (which despite different political circumstances would also shape that of liberated Portugal) and postwar. And a question that your latest post on the US Home Front campaign of the various Spanish opposition factions (well, 2 of 3, the Reds and the anti-reds, monarchism has limited traction in New Deal USA though more in the UK--surely there are some Yankees who think a Spanish king is proper and Romantic, and quite a lot of Britons whom however loyal enough to their own King don't particularly care to gift the Spanish with one certainly if most of them don't want one, but by and large the Communists and anti-Communist Republicans are bidding for Yankee favor and the monarchists for British) along with the Hollywood War does give me a hook to ask.
