Inspired by the PoD posted
here.
1949: Stalin gets disillusioned by the formation of the GFR and decides that his chances are unrealistic of wrestling West Germany from allegiance to America with the lure of unification as a neutral united German state. As a result, he decides to go for maximum gains in Austria, too.
1950: With the support of Soviet occupation troops, the Communist Party of Austria starts a series of strikes, which escalate to major civil unrest, with the seizure of the Bundeskanzleramt. The Austrian government is overthrown in Vienna and a Communist-led People's Front government is set up. Democratic parties' representatives flee to Western-occupied Salzburg and set up a new government. Both sides claim legitimacy over whole Austria, but the country and the city of Vienna get effectively divided between Western-occupied West Austria and Soviet-occupied East Austria. Austria is now divided like Germany and in a few months, separate states are proclaimed. The US government is alarmed by this renewed manifestation of Soviet expansionism and steps up its efforts at Soviet containtment; moreover, it is also concerned that West Austria is not strong enough to survive alone and starts to support the idea of a second Anschluss. British government follows US advice with less enthusiam, the French are reluctant to allow reunification but overruled by the Anglo-Americans.
Stalin is elated by the success in East Austria; he shares similar concerns about the vitality of East Austria, so he starts to push for a "People's Danubian Confederation" between East Austria, Czechoslovakia, and Hungary. The concerned parties are less than enthused at the perspective (the Czech and to a lesser degree the Hungarians harbor bitter feelings about previous union under the Habsburg, the East Austrians about the Czech ethnic cleansing of the Sudetenland Germans), so the Soviet secret police steps in and wages some sweeping purges. Compliance to Stalin's plans is ensured, even if bitterness lingers. Stalin feels confident to greenlight North Korea's offensive plans, expecting another easy victory.
America is even more alarmed by the new Communist aggression in Asia and reacts by staging a massive intervention in Korea, while it goes back to a partial wartime mobilization stance. However, Truman is concerned about a possible Soviet/Communist Chinese intervention in Korea and gives MacArthur strict orders to build a strong defensive position on the neck of the Korean peninsula on the 40th parallel, and only to make cautious advance towards the Yalu. MacArthur reluctantly complies. Mao orders CC intervention, even if some other Chinese leaders have misgivings and would prefer to make themselves content with the rump North Korean buffer zone that the 40th parallel demarcation zone would create. Stalin reluctantly gives permission for a Chinese offensive, hoping to wear US power down in Korea with a long war against their Chinese proxies.
Despite some hard fighting, the American defensive line on the 40th parallel holds out against the Chinese offensive, even if US reconnaissance thrusts towards the Yalu are overrun. America sends reinforcements to Korea, the Chinese suffer very heavy losses in their futile attempts to break US defenses. Truman and the UN reluctantly authorize heavy bombing of Manchurian targets.
1951-52: The CC Army continues to suffer very high losses in Korea for limited gains, while the US Aviation stages a round-the-clock carpet bombing of Manchuria. After most combat-worthy Chinese troops have been wasted in futile attacks, and the US bombings have disrupted their supply lines in Manchuria, the American troops start a gradual advance towards the Yalu. By the end of 1951, the front line has reached the Yalu in western Korea. The USA send veiled threats of using the nukes to level Communist China if it doesn't concede Korea to the UN. A coup overthrows defiant Mao, and Red China reluctantly agrees to a cease-fire. Korea is reunified in the Western camp.
Stalin is livid for the loss of face that the defeat in Asia caused. Besides giving his support to the overthrow of Mao, he orders to step up Communist activities against Western interests worldwide. He also starts a new sweeping row of large-scale purges within the USSR and in satellite states.
In Western Europe, local Communists (sometimes going beyond Stalin's intentions) stage clumsly uprisings. In France and Italy, this leads to outlawing of local Communist parties (their place in the political system is mostly taken by local Socialist parties). In Finland and Yugoslavia, however, Stalin decides he can risk throwing Soviet might in the fight and orders a Soviet intervention when the local Stalinist uprisings fail, quoting Finnish "violations" of the peace treaty and Titoist "selling-out" to the West as a pretext. Despite heroic Finnish and Yugoslav resistance, Finland and Yugoslavia are overrun by the Red Army, and Stalinist puppet governments are set up in both countries.
A Communist insurgency in nothwestern Iran manages to seize control of the territory. Communist-controlled Iranian Azerbajian petitions for "reunification" with their Soviet brethren, the Red Army enters the area and secures its hasty annexation by the USSR.
The West is alarmed by reckless Soviet expansionism, despite the recent great victory in Korea. America (and to a lesser degree Britain) steps up pressure to implement German and Italian rearmement as an anti-Soviet bulwalk. Washington also gives open support to Italian reunification with Trieste and West Austrian reunification with West Germany. A referendum in West Austria approves reunification with West Germany by 68.3%, Italian troops occupy the Free Territory of Trieste (both Zone A and Zone B) and its reunification with Italy is approved in a referendum by a 78.4% majority. Despite French misgivings about rearmement of ex-Axis powers, the impasse is broken when Rene Pleven proposes a wide-ranging plan to create a Pan-European Army under a supranational European leadership.
In America, relatively quick and decisive US victory in Korea paves the way for Truman's re-election for a third term in 1952 (he is extempt from 22nd Amendment's two-term limit).