The Italians performed well in Yugoslavia.Just reading 'The War in the West 1941-43' by James Holland and one recurring theme is how little use the Germans had for their Italian allies, usually regarding them as liabilities rather than assets and even some in the senior ranks of the Italian government felt their forces were simply unfit for war, a view backed up by their performance in Greece, Yugoslavia and Egypt.
Was there any better use for Germany's merchant ships that happened to be stranded in the Mediterranean? Simply sitting in neutral ports may not risk the ships being sunk, but it also doesn't contribute anything to the Axis war effort and writes them off entirely.but ships
Wanted or not, Germany had nothing else to make up their line as they over extended their flank during Case Blue.where they were distinctly not wanted by their German allies.
The German commitment to the Balkans was the result of Yugoslavia's internal political developments, Italian neutrality doesn't change that. At most it allows Germany to avoid having to occupy Greece.Add on German commitment in the Balkans
Let's actually run with that.its clear that the best thing Italy could have done for the Axis was not declare war at all...
So:
-Germany does not have an army in Africa and an army in Greece
-there is no net manpower gain as the equivalent is required to adequately occupy Yugolsavia
-the Axis is down one army on the Eastern Front
-on the other hand, the considerable number of vehicles and air units that iOTL were committed to Africa can be provisioned to the Eastern Front
-at the same time the UK's massive commitment to the Mediterranean theatre is freed up for use elsewhere, the extent to which this threatens the Axis depends on what follows
So, is Italian neutrality clearly better? I don't think it's clear either way.