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A world where the Hoare-Laval pact is accepted by the French and British governments, so keeping afloat their alliance with Mussolini's Italy against Nazi Germany. Without Mussolini getting isolated, he keeps opposing, with Franco-British support, German ambitions to annex Austria.
Finally, in early 1939, with it's national reserves close to end, the Nazis, desperate for some relief, decide to try their luck and invade Austria. On their backdoor talks, they managed to convince Yugoslavia to join them, promising to allow them to take south Carinthia from Austria and, if the Itailans got into the fight, the former Austrian Littoral and Zadar from them.
But this invasion ends leading to a massive response by Britain, France and Italy, joined by Poland and Czechoslovakia (both fearful of further German expansions), and, joining against Yugoslavia, Hungary, Bulgaria, and Albania (not annexed by Italy ITTL, given there was no Nazi expansion so far motivating Mussolini to expand in Europe, but frimly under Italian influence). By late 1939, the Austrian War is finished, with the defeat of Nazi Germany and Yugoslavia.
Now we're at late 1940, one year after the war. Germany has been divided in occuation zones of the six countries that took part on it's invasion, with the British and French jointly occupying the Ruhr, and all them jointly ocuppying Berlin. Poland has been allowed to annex Masuria, Upper Silesia, and Danzig, albeit with all them keeping some special autonomy.
Yugoslavia has been dismembered, with Albania, Bulgaria, and Hungary taking pieces of it, and independent, pro Italian states being carved out of Slovenia, Croatia, Bosnia, and Montenegro.
Along 1940, Mussolini proposed and started the Iron Axis, joining hard-right regimes of Europe around him. The British, with the Nazi issue now solved, became focused on containing the Soviet Union, and proposed the formation of an anti-Soviet pact. All of the Iron Axis joined it, being accepted that any member of this alliance would be automatically part of the anti-Soviet pact. France, with a strong left-wing element on government, stayed outside of the pact.
Romania showed interest in joining the ani-Soviet pact, but Mussolini vetoed it's entry unless it solved it's border disputes with Italy's allies Hungary and Bulgaria. As a result, it ceded Southern Dobruja to Bulgaria and the Hungarian-majority areas along the Hungarian border to Hungary.
Czechoslovakia, Lithuania, and Greece, all of them with disputes with Iron Axis countries, alarmed to see the formation of this bloc, went after the Soviet Union for reassurance. The Soviets were quick to enter in a pact with the Czechoslovaks, but demanded free elections (expecting left-wing wins) in Lithuania and Greece to deal with them. After considerable popular pressure, the Smetona and Metaxas governments finally accepted free elections, won by the Social Democrats in Lithuania and by the Venizelists in Greece. These new governments then got reassurance pacts with the Soviets.