WI Italians had established a greater military capability prior to the outbreak of WW2 (e.g. active embedding of German command structures & units, joint training & military maneuvers, 'exchange programs' with SS to foster greater cooperation and modeling of fascist ideals etc). How would this impact upon their war effort?
There is the excellent "Manstein in Africa" TL by Blairwitch749 that masterfully explores the scenario, although his PoD is in late 1940, not before the war.
In several ways a WWII Italian military that runs close to German effectiveness levels since 1940-41 is a decisive game winner for the Axis in the conventional field. The Axis gains air-naval supremacy in the Mediterranean, and conquers Malta, North Africa, and East Africa in 1940-41, the Middle East in 1941-42. Spain, Turkey, and Vichy France are wooed to join the Axis by its success and UK weakness. Hitler and Mussolini persuade Japan with Middle Eastern oil to leave America and South East Asia alone and attack Soviet Russia. The Regia Marina and the Marine Nationale in the Atlantic help the KriegsMarine achieve naval supremacy and screw Britain with naval blockade.
Massive and efficient Italian contribution to Barbarossa, as well as Turkish and Japanese fronts, Spanish and Vichy French sizable expeditionary corps, little to none Land-Lease reaching Russia by loss of Iranian and Far Easytern access points, the Axis having plenty of oil, and quite likely Hitler expanding efficient Axis integration to the other members by seeing his main ally so effective surely screw Soviet Russia beyond recovery.
America may or may not ever be able to join the war without a Japanese rampage in the Pacific, and even admitting FDR is somehow able to concoct a plausible casus belli out of Axis naval warfare in the Atlantic (assuming that the American public falls for the same "Lusitania" trick twice in a generation, which they were rather wary of in the 1930s), in all likelihood this is not coming earlier than mid-late 1942 at the very best, and America would surely come too little too late to save Soviet Russia, which shall be knocked down to Nationalist China levels, and quite possibly too little too late to prevent a collapse of Britain as well.
If America joins at all, Japan is always screwed. Although the USA may or may not able to join the war in time before Britain is forced to throw the towel, even if they do, ITTL Russia is always screwed and at the best America could do little more than crushing Japan, keeping the supply lifelines to Britain open, and fortify the British Isles, India, and Siberia against Axis invasion. A successful Allied invasion of North Africa or Europe would be ASB with conventional resources.
Nukes may or may not still be a game winner. Successfully infiltrating the effective air defense of a victorious Axis with a lone nuke bomber or an handful of them would be much, much more difficult than with gutted mid-1945 Japan. In all likelihood America would need hundreds of nuke bombers to saturate Axis air defense, which they won't get till 1948-49. In the meanwhile, a victorious Axis can build a sizable WMD deterrent with plenty of nerve gas and dirty bomb missiles since 1944-45 and hold British cities hostage as a MAD deterrent against American nukes. America won't get a nominal intercontinental bombing capacity till 1948 and in effective terms till the early 1950s.
Pretty much the only real game winner for the Allies ITTL is America using tactical nukes to smash Axis defenses and break through a major landing in Europe, and even so, there is still the issue of Axis WMD retaliation on Britain, so they would have to run the whole landing effort from across the Atlantic. Probably feasible, but no little effort. Of course, a really ruthless and desperate America could likely do to Britain what Germany did to Italy and Hungary in 1943-44, militarly occupy it in order to stop a UK surrender when Axis WMD missiles start raining down, but this has its own relevant political problems with the home front and the morale of the troops.
It is also quite possible that America may use Siberia and/or India a staging ground for its troops, however the magnitude of logistical problems and the difficulty of a conventional offensive vs. a victorious Axis Europe makes successful American invasion of western Eurasia from a Siberian or Indian staging ground quite unlikely, although they can certainly stave off an Axis invasion of India.
In short, this PoD means that unless America uses its assets in just the optimal way, the European Axis in all likelihood wins.
