Okay I must say that I personally think that some of the proposals to punish Spain for its participation in the Second World War ITTL seem to be based more on sick fantasies of revenge for imaginary grievances than anything else.
In addition to being based on the fact that for some reason the Allied leaders decide that Spain deserves WORSE treatment than what Germany will receive (you know, the country that started the whole damn war).
If I have understood the various punitive proposals correctly, we have at least three categories: safe proposals, probable proposals, and crazy proposals.
Sure proposals/This happen for sure:
-Anyone who was part of Franco's Government will end up hanging from a noose.
-All traces of Francoist legality and governance will be eliminated.
-Confiscations and sanctions for anyone who has supported the regime or has been enriched by its actions.
-New Republican government (de-Francoised) built from scratch on the remains of the original.
-Decentralized state with broad regional autonomy (based on the fact that the Second Republic was in the process of doing this, and that is what would be done in OTL Germany).
-This government explicitly and unequivocally renounces any irredentist claim (especially Gibraltar).
Probable/reasonable proposals:
-Spain loses all territory except the Iberian Peninsula, the Balearic Islands and the Canary Islands.
-Portugal gets Olivenza (no one cares enough to tell them no / it's seen as a way to "throw them a bone" to get them to agree to democratize their government).
-The members of the Second Republic in exile obtain participation in the new government of the new Spanish State.
-Compensation for damages to exiles.
Crazy proposals/based only on punitive fantasies:
-Balkanization of the country (there is no reason for it, it was not done even with Germany, it does not obey any strategic objective in the short, medium or long term, it will compromise the legitimacy of any government that is established for accepting something like that).
-Impose a return to the monarchy at gunpoint (legitimacy close to zero, it was not even done with Germany, the would-be King was licking the boots of Hitler and Mussolini, it does not obey any short, medium and long strategic objective term).
-Deny Spain access to the Marshall Plan (the hypothetical financial savings does not compensate for all the problems that will be caused by "letting the country rot", it will make the Allies look like disgusting hypocrites because they are giving money to GERMANY while Spain is not, it does not obey to any strategic objective in the short, medium, or long term).
"Ah, but Germany was divided" someone will say.
Yes, and that was intended as a TEMPORARY fix. NO ONE seriously intended for Germany to be permanently Balkanized.
This has more in common with creating a Kingdom of Bavaria and a Kingdom of Hanover occupying the entire (western) German coast and telling the remnant of Germany that it can NEVER consider those territories as part of Germany again, and that any claim to reunify will be responded to with MILITARY FORCE.
Edit: To clarify, I think the first two groups' proposals (sure/reasonable proposals) are things that will definitely happen / there is no realistic way to avoid them from happening / I see no reason to object to them because they fit the Allies' goals and are not unreasonably punitive. It is the third group (crazy proposals) that I believe there is no reason to carry out.