An Italy neutral in WWII?
After the war Benny as the leader of one of the few intact nation of the world can bring the other fascist regime of Europe (Spain and Portugal and maybe Greece if they are not invaded and if we are bold Argentine) to form a third, weaker but still important, diplomatic/military block in the strugle between USA and URSS.
In this TL maybe is Benny or one of his successor to help create the Non alligned movement
Italy, Spain, Portugal and Greece? You HAVE to be joking! That is still far too weak even if you throw in Argentina.
Well wait till the oil of lybia flow and bring some money and think of what this little block can do expecially regarding decolonisation and the middle-east or the strategic position of the horn of Africa italian colonies.
A neutral Italy can use the war for obtain the OK for the invasion of Yugoslavia or get other little concession but the real boon will be in keeping intact her resource and basically be the local major power for awhile.
Yes realistically a lot weaker then USA and URSS but still a factor to consider nevertheless and frankly aside ASB intervention i don't see any other option for another player on the cold war game.
RIGHT NOW the combined income of Italy,Spain,Portugul, Greece and Argentina is $4.35 Trillion going by the IMF numbers . The US alone is $14.65 Trillion. http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP) During the Cold War it would be even worse. Also the bloc would have infighting, confused command chain, quite likely different weapon systems, and redundant logistical systems which will weaken its military power greatly. It wouldn't be considered real compitition for the rest of the NATO countries or the WP.
The issue is that while China was a powerful nation, it wasn't really a bloc in the sense that NATO and the WP were.Sino-Soviet split made this OTL....
i'm not consider or saying that this block will had a change of victory in a war or it will be an economic powerhouse but simple that can be a player in a ideological three way cold-war between fascism, democracy and communism.
And BTW the 'RIGHT NOW' in this case mean nothing, as said earlier for Italy count Lybia who by the 50's will have a sizeble italian population and oil can be used for propping up the economy or the colony in the Horn of Africa are in the just position for threaten the ships from the Suez canal and the Persian Gulf. After WWII if Italy stay neutral she will be in a unique position, basically the only european great power (even if last of the great power...or the first of the minor) to be intact, this can be an occasion for serious inroad expecially in the Balkan
For Portugal, they lost the colonial empire only in the 70's and fight with a weapons embargo with other nations backing them they can possibly hold Angola and Mozambique (better the first more resource rich) or simple to create more international tension, image just before the indian attack at Goa an Italian naval squadron reach the portughese colony so to warn the indian to not even think about it.
For Greece well that depends if there is no invasion and successive occupations by the nazi, in this case no looting and later civil war so the economic situation will be teoretically better.
So yes it will be infighiting (but frankly neither NATO or WP were infighiting free for use a little understatment) and seroius problem in common command and coordination, lesser on the logistical side as probably Italy (and in minor role Spain ) will be considered the weapons manufactoreer of the alliance, but as already stated this is not a world conquerer alliance just another player, who still mantain a good influence and military forces that cannot be ignored and who probably stay afloat playing one side against the other and mantaining a nuclear policy akin to the French one.
Or just to screw up more thing, image in this scenario that Israel at the eve of the six day war (or a similar conflict) reach Italy to gain aid as she probably had a similar problem in Lybia, and before the racial laws will be mentioned, with neutrality that bullshit will go away ASAP as done only to please Adolf and usually welcomed with a WTF by the population.
Even with oil they will be a bit player.