In the Americas, Mexico’s Socialist government pursued policies of land reform, massive tax reform, universal public healthcare, the promotion of cooperatives, and the nationalization several industries. These included petroleum (Pemex), natural gas, cement (Cemex), telephone (Telmex), water supply (Hydromex), railway (FNM; Ferrocarriles Nacionales de México), and electricity (Electromex). They also pursued setting up new state-owned companies pertaining to insurance, public intercity transit, alcoholic beverage control, iron and steel manufacturing, mining, forestry, as well as an airline. This was accompanied by an unambitious foreign policy, mostly focusing on containing the US, and keeping relations cordial with the Workers’ Union. Mexico during this period was largely isolationist, and the public was not interested in the prospect of another war.
In 1938 France initiated another aggressive action in Iberia. Following a nationalist coup in Portugal intent on establishing a government similar to France’s, a Portuguese government-in-exile was formed in Spain. Spain, seeking to restore some of it’s lost greatness, invaded northern Portugal, seeking to reinstate the legitimate Portuguese government. While Spanish forces believed they would be able to take Lisbon in just a few days, they found it much harder. Portuguese forces rallied to fend off the Spanish, and partisans took up arms in occupied territories. Spain’s refusal to retreat, however, lead to French troops crossing the border on April 7th, 1938. With most the Spanish army in Portugal, only a few thousand troops contested the French invasion, and by April 12, the Spanish government realized that no foreign support was coming, and they surrendered. Following this, Spain and Portugal were united, in a deal that greatly benefited the Portuguese, and the National State of Iberia was formed. The government was a close replica of France’s, with a figurehead monarch and the National People’s Party leading the nation. This country achieved some foreign recognition, but never received it fully due to the fact it was largely a French client state.
Map showing territorial control during the invasion of Spain
In Eastern Europe, the Vozhd’s Empire rapidly expanded. By 1939, Central Asia was in Russian hands, and so were the areas north of the Caucasus. The only thing that had stopped Russia from annexing them too was Ottoman threats of war if Russia continued expansion in their sphere of influence.