Let us suppose that Operation Valkyrie is successful and the new German government decides to sue for terms. What does the board think they would offer? And what would the allies accept?
What they planned to offer is on record, roughly:
- An immediate cease-fire, and withdrawal of all German troops to the 1939 borders, except possibly in parts of Poland. (The 1918 border there, I think.)
- Free exchange of all PoWs.
- Nazi war criminals to be punished by a German tribunal.
- No reparations.
IIRC, most of the Schwarze Kapelle thought Germany should keep Austria and the Czech lands, and the areas lost in in 1918-1920 to Poland - there may have been talk about plebiscites there.
This is going to fly like a tungsten kite.
The reaction of the Allies to VALKYRIE will be distrust. "The rats leaving the sinking ship." Most of the U.S. and British leaders were very paranoid about a "Prussianist" military-industrial cabal secretly controlling Germany with the Nazis as front men.
So all German "peace feelers" will be rejected, and the demand for unconditional surrender will be reiterated.
Meanwhile, the remnant of the Axis coalition will dissolve. OTL, Finland, Slovakia, Romania, and Bulgaria all bailed out of the Axis in the next few weeks. Hungary was prevented, and Slovakia suppressed.
The implication of VALKYRIE is that Germany thinks the war is lost. I think the neo-German regime writes off all Axis allies. German forces will be evacuated from France, Belgium, Italy, Norway, and the Balkans. The Axis satellites will collapse or flip. The retreat starts in France after the COBRA breakout of 25-31 July, instead of the idiotic Mortain counterattack.
(This is going to be bad for Finland; Stalin will probably decide that with Germany giving up, he
can afford to force complete submission.)
The Warsaw Rebellion will happen as OTL. If the neo-Germans are clever, they will let the Poles have the city, and re-establish the exile government. This will block Stalin from establishing the Communist Lublin government, and drive a wedge among the Allies.
However, in the long term, the neo-Germans have no real choice. The Allies will I think continue to stonewall. Stalin wants to grab everything he can including parts of Germany, and to smash this new regime, which he regards as hardly different from the Nazis.
They can stabilize the military situation. but they can't roll back the tide. They probably repulse an Allied offensive somewhere in September, but that won't change any minds.
At that point, conscience will start to have effects. If German surrender cannot be avoided, what's the point of fighting to delay it, at great cost of German lives and destruction in Germany from bombing?
A wild card is the political and race prisoners of the Nazis. I think few if any of the SK really grasped the depth of Nazi crimes or the conditions of the prisoners. Once they are in power, they will be truly shocked. They may propose a truce for the safe transfer of prisoners to Allied custody, where they can be cared for. If the Allies refuse (as they probably will), the neo-Germans may be so ashamed that it makes additional pressure for surrender.
I think the neo-Germans bite the bullet and surrender no later than October 1944.