Mussolini remains neutral

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In my TL Giovinezza I explored this a lot (Until the Germans invaded Italy in December 1942). Pretty much the lack of a weak underbelly for the Germans, and the lack of any Balkan front and Africa front will lead to the Germans performing better on the Eastern Front. The Germans potentially could have captured Moscow, but still would have lost eventually (In my TL, it was because they opened a Second Front in Italy by invading the country.)
 
Unable to stand out or win any notable victories, and certainly in no position to behave in a chivalric fashion, Rommel is seen as a solid and aggressive commander who rises to Lt. General before dying in Operation Bagration in summer of 1944(or it's counterpart).

Regarding the battle in the Soviet Union, Rommel had enough of a bitch fight with the SS and the German High Command about Waffen SS units killing small numbers of civilians in France in 1944 OTL. He isn't going to be turning a blind eye to Einsatzgruppen SS units killing hundreds of thousands in his area of operations like Von Manstein and others.

I see him quickly getting into too many fights with Hitler and the SS and either getting removed or resigning his commission. What Rommel was able to get away with in terms of keeping Himmler's dogs off the local population incuding Jews in his area of operations in France and North Africa simply would not have happened if he was sent to Russia. I also doubt Hitler would have put up with Rommel in Russia telling Hitler to f*** off over illegal orders as he did OTL in Africa and France. Hitler was too ideologically invested in Russia's destruction.
 
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I guess Italy keeps and successfully Italifies Libya? I'm told they were doing a pretty good job of making Libya just another part of Italy right up until they decided to pick the wrong team in WW2.
 
I've got to say, this is an impressive necro. Alas, I cannot help but participate.

If Mussolini did remain neutral, WWII would be an entirely different animal. Continental Europe would likely be dominated by the Soviets (as a failed Anglo-American invasion, due to a lack of experience against the Afrika Korps, causes the Allies' entrance into Europe to be quite late). Then again, the Soviets would be tied down with extra German forces not in the Balkans/Africa in an earlier and potentially more devastating invasion. So Europe might be the same or dominated by the West or Soviets.

In contrast, I imagine that the Pacific theater would last a much shorter time than it did IOTL. No British forces needed in the Med. would free up a lot of the RN for combat in the Pacific and Indian Oceans, leaving the IJN fighting 2 fronts across two oceans (Indian/West Pacific and East Pacific). Hell, there may not be a Pacific theater at all (or at least as we know it); Pearl Harbor was inspired by the British attack on Taranto. Take this out, and the US either isn't involved in WWII (highly unlikely) or the IJN loses its only advantage (surprise/greater initial numbers) against the US, meaning that they're screwed.
 
Benny wise up and accepting some little allied bribe to stay neutral? Well thing change a lot.
In the eastern front now Adolf can attack when he want as he don't have to bail out Italy and has some more troops at his disposal, how can this will help him is debatable, probably same end but with more loss for the SOviet.
Second Germany has now a place where buy supply and other material, not by much but everything help.
The UK can be a little less dependent of American supply as now there are less commitment.
Without other front the allied will try more raid Dieppe-style to mantain pressure on Germany or even launch an invasion in 1942/43 to support the URSS.
We avoid the mediterranean, North Africa (till the equivalent of Op torch) and East Africa front, so UK has more resource so Asia even if not a priority will see more reinforcements and more modern equipment than OTL make Japanese job more harder. Regarding the japanese, if the oil embargo is done as OTL there will be a war as resource are needed and all the other powers are occupyed on the war in Europe; Pearl harbour can be butterflyed away as without a Taranto equivalent there are no proof of feasability so Yamamoto work on convincing the brass of the attack will be a lot harder. Instead we can probably seen a greatly expanded attack on Philippines and South East Asia.
For Italy this mean continue to italianize Lybia and make business with all side, maybe even getting concession by Greece if Benny is clever diplomatically...but it will be very hard. Possibile target is Yugoslavia, an old ambition of Mussolini (and a lot of italian politicians) was expanding italian influence on the balkans, but before an attack Benny will try to get 'permission' from Germany and Berlin.
 
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