Thanks. I edited my post to get rid of the references to kings of San Marino.
1501 The Basques send ships to explore the New World, and encounter the Aztecs, and start trading.
Other nations join in, and San Marino is at a sudden disadvantage, since their only route is through the Straits of Gibraltar, and the Basques don't want the competition.
England still colonizes N. America, the Basques colonize Mexico, Thuringia gets S. America, Holland gets the Caribbean. San Marino, not wanting to be left out, and being blocked by the other Europeans and the Ottomans, simply makes friendly agreements and alliances with everybody from the Basques to the Russians. They also stay on good terms with the Ottomans, Egyptians, Sicilians and Moors.
The Basque and Thuringian economies zoom upward due to the influx of Aztec and Inca gold, then zoom downward when the gold runs out. But the San Marinese aren't so affected, and they take advantage of the situation to start expanding their borders in Europe. This gets the attention of the English king, and the San Marino-English War lasts a few years in the early seventeenth century. It ends with the European kings being divided between the two powers.
England is allied with/controls
Holland, Thuringia, Saxony, Danzig, Hungaria, Czeckia, Bohemia, Pomerania.
San Marino is allied with/has power over
Catalonia (Basques), Sicily, Bulgaria, Greece, Balkans
This situation lasts for about ten years after the war. Then more, smaller wars ensue and by 1700 everybody in Europe has more or less equal power. But then religious dissident colonials in the Americas are agitating for independence. San Marino offers its services as a neutral intermediary in some disputes. This is accepted, but then their honesty makes them lots of enemies, and Europe erupts in revolutionary wars in the 1780s. San Marino suddenly becomes isolationist and neutral and survives the wars intact.
By 1820 the continent is at peace, but poor, tired, backward, ripe for San Marinese expansion again. But the San Marinese army and navy are really not prepared for that, and the other countries aren't really welcoming the San Marinese, who are becoming like OTL US, patronizing and annoying.
San Marino's influence is limited to propaganda, play-writing, poetry and opera, which is quickly imitated and parodied in other countries.
Britains erstwhile N. American colony, the United Republic of Avalon (independent since 1799), is expanding and becoming stronger, and eventually becomes dominant in the New World, though without the Manifest Destiny.
An economic downturn in the 1890s brings about a rise in fascist philosophies in Europe, and a fascist dictator comes to power in San Marino. He goes to visit the fascist ruler of Thuringia, and both are assassinated...