OK, let's say Mussolini gets a brain transplant in 1935. That's after he's already committed to the extravagantly costly conquest of Ethiopia, but before the beginning of the Spanish Civil War. He sets out to increase Italy's territories and sphere of influence, but without entering wars against any fair-sized power. He's also now endowed with an unerring sense for opportunities and timeliness.
1935
Italy starts with its post-WWI territory, which includes a sizable chunk of Istria along the Yugoslavian border, the Dodecanese, Libya, Eritrea and Somalia. It has a concession in Tientsin, China.
1936
- The Ethiopian War gets wrapped up; this is the largest territorial expansion.
- The regime secretly launches an Italianization campaign of the Ionian islands. No official policy, but subsidies are offered, naturalization as Italians made easy by the Italian consulates in Greece, etc.
- Italy drives a hard bargain with the Spanish generals at the very beginning of their coup. Instead of offering a hike for free, the troops will be airlifted to the mainland only if the generals grant long-term extraterritorial basing rights in the Baleares, Canary Islands, and Ceuta (as well as very favorable prices when it comes to exports of tungsten, copper, etc). The generals can't give up sovereign territory in an all-out annexation (that would be a political suicide), but bases are possible. The generals accept.
1937
- Italy mends fences with Britain and France as much as possible. It doesn't send a very noticeable army-sized force in Spain operating as one Italian bloc, but only dribs and drabs of volunteers who serve in the Spanish legionary units. Arms are supplied to the rebels, but not openly. No undeclared submarine warfare.
- The bases in Spain are established.
- Secret funding of Croatian nationalists is ramped up. Contrary to OTL, some money is also given to Serbian Communists.
1938
- Italy remains neutral and aloof, no Pact of Steel. No racial laws are passed, contrary to OTL. At Munich, Mussolini acts solely as a bona fide impartial broker.
- Talks with the British and French resume, as to the supply of Italian arms and aluminium. No final agreement reached, though.
1939
- Albania is occupied as per OTL.
- After the beginning of the war, negotiations with the British and the French resume: the trade mentioned above may be finalized, Italy will undertake to remain neutral, but demands border adjustments in the Alps and along the Tunisian-Libyan border, and British Somaliland. The French refuse a loss of metropolitan territory, however small, but agree to a smaller loss in Tunisia than the one the Italians demanded. The British accept to give up Somaliland but only after the end of the war. Deal is done.
1940
- The destabilization of Yugoslavia continues.
- Claims are raised against Greece, concerning the mistreatment of Albanian minorities along the Greek-Albanian border and the Italian minority in Corfu. That's really small, but growing thanks to the Italian measures mentioned above, and anyway Fascism claims it to be much larger than it actually is. For the time being, nothing comes of it, as the Greeks ignore the issue.
1941
- After Barbarossa has begun, and while everyone is occupied elsewhere (including the British, who are busy in the Atlantic and will soon be busy with the Archangelsk route), Italy forces Greece to negotiations. In OTL, the ultimatum the Greeks refused amounted to total loss of sovereignty, in this ATL the demands are limited; additionally, neither the British nor the Germans want to rock the boat in that area, and Italy isn't an ally of Germany. Greece caves in. Marginal border territory is lost along the Albanian border; a joint Italo-Greek management of the Ionian Islands is agreed upon. Naturally, with Italy being the senior partner.
1942
- Italy allows individual volunteers to reach Vienna, where an Italian legion is formed to fight in the East. That doesn't upset the British too much, and is a bone thrown to Hitler.
- A foreign-fomented coup is attempted in Belgrade. It fails, but rioting follows in Croatia, and the kingdom is clearly tottering.
1943
- Croatian uprising. The rebels are immediately supported by motorized Italian units. The Italo-Yugoslavian war ensues. Nobody has the forces or the interest to meddle in it. Italy doesn't push its luck, and stops its troops some 100 kms South of Zagreb. The Kingdom of Croatia is established, Pavelic is its Poglavnik. A few kilometers along the border fall under Italian annexation, but Croatia is a country on its own - in the Italian sphere of influence.
- The Italian-German trade dwindles to nothing. The formidable Alpine Line is complete. Italy lodges complaints with Germany for the sinking of some of its cargo ships by German U-Boote.
1944
- As the Allies steadily reduce German-held territories, Italy severs diplomatic relations with Germany.
- Italo-Yugoslavian peace treaty. Yugoslavia accepts the loss of Croatia. Croatia is in very close relationship with Italy.
1945
- Italy declares war on Germany and Japan. Simultaneously, it enters negotiations with China to get full sovereignty on its Tientsin Concession. Modest operations along the Alps.
- As the war draws to an end, Italy informs Britain that it is taking the Somaliland, as agreed. The british dither, the Italians set a date and move troops in. The British lower the flag.
- Final Italian offensive in the Austrian Alps. A depth of some 20 kms is gained.
1946
- The peace treaties acknowledge all the territorial gains of Italy, including the border region in Austria and Tientsin. The basing rights on Spanish territory will last until 2035. Croatia is recognized by many countries. As a participant in the war, Italy is among the UN founders.