WI/PC: Italy remains neutral in WW2?

The problem is that Mussolini became firmly convinced that the war would be over by summer 1940, and felt that he needed to jump in to sit at the peace table. It was obviously a very wrong decision (at best Italy might have been ready for a war by 1942), but let's not forget that France was almost gone in June 1940, and that there were strong arguments for peace in UK too.

Assuming the fateful decision is not taken (in the end it was a gamble, even with apparently good odds), by August-September 1940 it should be pretty clear that Germany is not capable of invading the British Isles, and that the British will not sue for peace (as a matter of fact, the successful evacuation of Dunkirk is also a very strong hint that the war is still far from a conclusion).

Let's assume that Benny gets cold feet in May 1940, for whatever reason, and that the negotiations with France and UK are more decisive.
It would be grat if - for once - Italy would look at rewards which could bring in substantial economical benefits, rather than just land-grabbing for the sake of land-grabbing.
Among the items on the agenda, the only three really worthwhile were Djibouti (good harbour and terminal of the Addis Ababa-Djibouti railway), more favourable terms for Italian ships going through Suez and some benefits in Tunisia (more Italian school, better economic penetration: I don't think a co-dominium is really needed or in the cards). I would also believe that a skillful negotiation might have achieved some kind of carte blanche in Yugoslavia (but it is not really a vital gain, IMHO). Surprisingly enough (or maybe not :() I've not been able to find any negotiation in terms of pure economic benefits: preferred status for supply of coal and iron ore, for example, or even more importantly the possibility of a participation in the IPC (Iraq Petroleum Company) or the AIOC (Anglo-Iranian Oil Company). The latter (British controlled) is more difficult, but I am convinced that the French might have been convinced to divest half of their participation in IPC).

The other thing which would have made a difference for a neutral Italy would have been the possibility of receiving technology transfer (in particular in the oil industry) from USA.

Just sitting out the war would have been a net benefit for Italy. As a matter of fact they would have also the opportunity to ramp up their economy, and probably would have got into the war at a much later stage, on the Wallies side. My very strong belief is also that a richer, more prosperous and not war-ravaged Italy would have slowly get peacefully rid of the Fascist regime, and moved back to a liberal democracy (most likely this would happened after the death of Mussolini).
 
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