This has probably been done before, but I want to see if we can look into any new insights on it. I suppose my prompt is more of a two-pronged scenario: first, what would be the best way to circumvent the Spanish expulsion of the Moriscos in recently reconquered Spain, and second, what would the ramifications of those Moriscos staying in Iberia? For the first, I think a better POD would be long before the Morisco Rebellion, which didn't seem to have a glimmer of hope for success. Maybe enervating the Inquisition somehow, through slain leaders or external pressure? Thoughts?
Im no expert, but I guess some official protection for Muslim and Jewish subjects would be a good start. It wasn't exactly unheard of in Medieval Europe, but im not sure how likely it would be for the Spanish kings to implement it. Replace Ferdinand and Isabella with a more tolerant couple prehaps?
This POD may lead to a change in the fortunes of Spain in the future. If the Hapsburgs inheriting Spain is butterflied due to no Ferdinand and Isabella, then that leaves Spain with 2 advantages over OTL.
1- Spanish money isn't wasted on paying to preserve troublesome Hapsburg territory in Germany and the Netherlands.
2- Spain has an extra income source in the skilled artisans of Andalucia. This could mean that despite not having as many lands in Europe outside of Iberia as OTL (with the exeption of Naples, I think), it could end up being a stronger power then OTL.
Morisco money could even help proto-industrial development later on, but thats probebly thinking too far into the future.