Italy and the Spanish Civil War (1936-1939)
Italy partecipation at the spanish civil war was extremely complicated; not only there were no full agreement in the goverment on who materially suppport but there were a lot of political repercussion in any possible move and the numbers of interested players grew in number every day.
To better understand the Italian situation, it's better make a little recap of the situation in Spain; in 1936 after years of growing unpopularity of King Alfonso, who whose supported by an unstable coalition of moderate conservative and moderate socialist, due to the mismanagement of the economy and the costly war in the Rif.
After years of strike, protests and rising political violence, in August 1936 a cabal of army officers inspired by the new ideology born in France and Uk and lead first by Emilio Mola and after his death by Francisco Franco launched a coup d'etat against the King to install a new government; this attempted failed due to poor planning and quickly become a civil war as many groups armed themselfs for the fight.
The conflict in Spain become a multisided war between different faction, on one side the Nationalist, that originated by the group attempting the coup and were succesfull in swaying for their cause the great part of the spanish military; on the other side there were the monarchist and the socialist, nominally allied to mantain the (somewhat) democratic government but not at the best term with each other and many time more busy figthing each others than battle the nationalist, especially during the first years, finally there were the Carlist, supporter of the Carlist claymant to the throne of Spain and catholic extremist and till the last year of the war usually fight every other faction.
Quickly side were take in the international stage even with different fervor and intensity, while the French and the British were lavish in their support of the nationalist, even sending military units behind the guise of 'civilian volunteers', Germany and their allies were more restrained in their help, giving to the monarchist/socialist tentative alliance a trickle of supply and old equipment and even limiting the flood of volunteers departing for Spain to fight against the nationalist, this due to a mix of political apathy regarding the external world and a troubled internal political scene, economic situation and the desire to not engage directely the Entente...at least for now.
For the italian goverment the situation was even more complicated as there were support for all the faction, officially the government and the King pledge to give aid to the recognized official goverment of the Kingdom of Spain, a nation that the common neutrality during the war had made a much closer patner than before and even if limited due to the general economical and geopolitical situation, a stable quantity of old equipment (weapons, uniform, aircraft, artillerry and even some tanks) were sent to them; also important was the sheer number of men (and women) that departed Italy to join one of the group that was figthing in Spain as quickly Italian start to battle and kill Italian in a foreign land in the name of religion and ideology.
The main reasoning behind allowing such increasing human flood to reach Spain, was that was better they were far from the nation and busy fighting and dieing than remaing in Italy creating troubles as the heated words in the journals and in the political gathering quickly were substituted by fight between supporter of different faction and so the politicians see sending them away to blow out a 'little of steam' and with the advantage to cut their numbers a little and identify all the potential troublemakers when and if they will return home.
Another problem was the ultrahortodox Carlist faction, hardliner catholics that in the first years of the war fight alone against all the other faction and with the final objective to put the Carlist claymant on the throne of Spain, they were also the group with less international support...except some extremist group in Italy, Poland and a sizeble numbers of Vatican officials that see them as the last true defender of the faith, so it was thanks to them that whatever equipment and diplomatic recognizion arrived even if it was too little to make them nothing more than a wild card (not considering the many embarassement given to the Vatican as the carlist atrocities were well pubblicizated during the time of war), at least till February 1938 when finallly the work of the Vatican secretary of State Cardinal Eugenio Pacelli give his fruits and the Carlist joined the front against the nationalist, in exchange of a postwar marriage between the heir of the spanish throne and the daughter of the Carlist claymant.
Naturally the help given to the monarchist/socialist faction created some tension between Italy and the Entente, especially with France, that was usually kept on the realm of the diplomatic words even if some measure that can only described as 'retaliation' were taken regarding the cultural italian rights in the British and French Empire but every now and then some serious incident happened that put at risk the entire war in Spain to become the lit for a much greateer conflict like when in January 1938 a 'unidentified pirate submarine' attacked and sunk the italian merchant ship Tirreno directed to the monarchist help port of Barcelona and that was transporting supply and war material; the ship was lost with all the crew and immediately unit of Regia Marina were sent in the zone to investigate and to make the route safe. To this both Paris and London asnwered by sending their naval unit, officially to help in keep the zone safe but in reality to counter any support to the monarchist given by the newcomers, soon even some Germans units joined the party and for a couple of days the situation was extremely tense with accusation and counteraccusation between all the side, at least till to resolve diplomatically the affair and preserve the peace all side decided to blame an unknow submarine involved in piracy, a decision that was not taken well in Italy even if the joy for the avoided conflict silenced any serious protest...at least in the beginning. The only real outcome of this crisis was a pledge of non intervention in the war by all the powers involved, even launching a series of patrol to intercept the cargoes full of equipment destinated to the various faction; naturally the Entente had no intention to honoring the agreement and Berlin and Washington fully understood that, still they see that as a success as it give them a certain diplomatic cover in the eyes of their public opinion...in the end the only result of such pledge was to make much more difficult for the monarchist and socialist get new supply and so begun their slow defeat.
The other big diplomatic clash that involved Italy was the so called 'Rome Gold Affair', with this name is called the transfer of the almost 700 tons of gold of the reserve of the Banco de Espana (and many tons of silver donated by the population to finance the war) from Madrid to Rome as a safety measure to protect from the nationalist (or other faction), a decision that even at the time was considerated controversial and borderline illegal but due to the situation in the nation and the pressure of the government and many international patners, still happened with the full authorization of the Finance Minister Julio Negrin.
Departing from Cartaghena in early Novermber 1936, using the italian cargo ship Cortellazzo as transport and with the escort of Battleship Francesco Morosini and the destroyers Boreo, Euro and Nembo and 3 days later they arrived in Rome where the gold was quickly transported in the vault of the Banca d'Italia in the name of the recognized Spanish government for safekeeping and for use it for financing the war against the nationalist (naturally paying a reasonable price to the italian authorities for that). During the coming years, other cargos with precious metals and other object of value reached Italy from Spain for security and a lot of money was transferred from Spanish asset to Italian banks, all this probably originated by the seizure of private assets and the liquidation of pubblic funds and not considering the money brought by the more than 60.000 refugee that found a new home in Italy after the war.
While seriously diminished due to the war expense and the management cost, the leftover money was the main mean to finance the Spanish government in exile so immediately after the end of the conflict, the new government (with a somewhat lucklustre support from his entente allies) demanded the restitution of all the transferred treasure, in all his form; a request that Italy plainly refuse as it considered the nationalist government illegal and for the next 15 years this argument dominated the relations between Rome and Madrid with neither side willing to cede even a diplomatic inch .