I've been wondering about it too, I might not have posed it as a direct question but I'd like to rectify that and third your motion.
You're clearly talking about OTL.
OTL, Portugal's behavior was really odd; as a neutral they gave an outrageous level of license to the Allies. Why didn't they ever just throw in with the UN openly? They were well shielded from any retaliation Hitler could throw at them and the Japanese had already done their worst, more than enough to justify a DOW against them.
I think. I assume that when the Japanese took Hong Kong they took Macao too, if so then they'd invaded not one but two Portugese Far Eastern possessions. I can barely conceive the possibility that they invested Hong Kong but left Macao alone, holding it hostage by the implied threat they'd invade and flatten the place if the Portuguese made a wrong move. That would explain their diplomatic restraint.
But I don't see the Japanese armies in China being that Machiavellian. I could look it up but my browser is being all wonky.
So, assuming the Japanese did invade Macao too, why wouldn't Portugal have DOWed just Japan, on the grounds that they did violate Portuguese territory, and having already done their worst against the Portuguese in their power, were in no position to do any further harm to them farther west and so Portugal would have nothing to lose.
Except of course the possibility Hitler would take offense and retaliate with his own DOW against them, which could hurt them--certainly by including Portuguese flagged shipping in the U-boat war, and conceivably if he ever managed to flip Franco over to active Axis membership, a crushing German/Spanish invasion might have been in the cards. But getting Franco onside like that would not be easy or likely; if nothing else Franco was well aware how dependent Spain was on seaborne trade that the British could cut off any time.
So I am mystified why, OTL, Portugal's Salazar didn't simply cite his country's long-time good relations with Britain and the offense Japan had committed against them to DOW Japan and see if Hitler were then stupid enough to use that, or Salazar's many one-sided deals with the Allies, as an excuse to retaliate in kind--which would put Portuguese assets at some greater risk but also bring them in as subsidized full partners in the winning Allied war effort. By 1943 or '44 at the latest it should have been clear the Anglo-Americans were going to win, or at any rate Iberia would be safe and the Germans would surely be swept from even under the seas, so he should have tipped over westward by then.
So who can explain why Portugal was not simply and openly an Ally in the OTL war, at least in its last years? Salazar's willingness to assist the west in the form of providing bases indicates to me either he was not deeply ideologically opposed--or he greatly feared that if he refused the RN and later USN permission, they'd just take the Azores and any other assets they wanted by force, he could squack and join the Axis and be damned with them if he did object (and Portugal would lose Timor, Macao, Angola and Mozambique forever) so he may have been an Axis sympathizer who felt strong-armed into submitting.
So which of those was it, or some third thing? It's very puzzling.
And for Astrodragon--are things any different with Portugal in this timeline? It looks to me like all the factors that would have pulled or pushed Salazar into openly joining the Allies are stronger here and any factors leading him to hesitate or even work for Axis victory are weaker. A German invasion or coup in Spain would be even stupider and less tenable or conceivable; the RN is stronger in general and particularly at hunting U-boats, Timor--I've lost track of whether the Japanese invasion there has been repelled or not, but if not yet its days are surely numbered, and the people driving the Japanese out would be W-Allies--Aussies, other Commonwealth, DEI, maybe by then some Americans, and for East Timor to remain a Portuguese possession it would behoove Salazar to have good relations with London. Berlin can't do him either harm or favors. But with Ally membership he gets protection of all the colonies Portugal now holds, including an East Timor actually back in Portuguese possession, plus a firm claim on getting Macao back. And probably lots of money in the form of military aid and donated weapons and training.
Maybe he still figures, as apparently OTL, he gets most of that and avoids having to commit any Portuguese soldiers or sailors to do their share of dying in Allied operations, if he's just an outrageously friendly neutral? That even a DOW on Japan, richly merited as that is, would entangle his weak country into shared burdens it shouldn't have to bear?
Is that pretty much his reasoning OTL and will it still hold here despite all the shifting of the odds in the Allies' favor?
Portugal in WWII is a fascinating subject and books have been written about it a good one is Lisbon: war in the shadows of the city of light by Neill Lochery
Basically Portugal took the position of neutrality and allowed both sides more or less freedom of operation within Portugal as long as they kept a low profile. For example Portugal expelled diplomats and spies from both the Allies and Axis throughout the war. Also consider that Portugal possessed deposits of wolfram(tungsten) without which Germany's war machine would grind to a halt. This meant that Germany HAD to act to seize those resources if Portugal sided with the Allies. As a side note Portugal made quite a lot of money selling tungsten to the Germans and I believe they are the only country which was allowed to keep the gold it got from Nazi Germany after the war.
Regarding colonies Salazar's top priority was to maintain Portugal's colonial empire at all costs. It took all the leverage the Allies had to get access to the Azores and that was even with the condition that it be used only by British soldiers( in practice the allies fudged this by placing all the American troops on the Azores on a technical loan to the British). The alliance with Britain was the only way Portugal could justify the use of the Azores to Hitler.
Regarding why Salazar didn't just throw in with the Allies in '43/'44 well Salazar thought that the best possible outcome of WWII would be a negotiated surrender that would prevent one country from dominating Europe in the aftermath.
Sorry this post was a bit messy but I'll look through my copy of Lisbon and give you a more detailed answer when I get a chance.