Another long history post. I figure this is necessary because if anyone decides to help out with the mod, they should know roughly what they're doing.
Also, if anyone on this board is an expert on the politics of the countries mentioned below, please let me know if the story at least looks plausible, i.e. make sure that there are no totally "wtf" developments.
Part II.
Italy.
The Spanish experience proved to be contagious, and in the next two years, similar civil wars broke out also in Belgium, Yugoslavia, Finland, and Italy. There was a real fear in France that if any of these countries were to fall, France would be the next in line. The Germans would not even have to invade Paris, their French fifth column would do the work for them. "Better Hitler than Blum" was the catchphrase used by a vocal, though perhaps not very large, segment of the anti-communist population. To this end, France provided extensive training and support to the anti-German forces in all those countries, a factor which helped greatly in preventing their collapse.
Instead, the collapse of Italy proved to be particularly hurtful to the image of the international Fascist movement, and it did a lot to halt the spread of fascist-like movements worldwide, especially in Catholic countries. Until 1934 Fascist Italy seemed to be doing splendidly and nothing stood in its way to greatness. It had attempted to pursue a balanced foreign policy, which sought to increase Italian influence abroad without antagonizing any of the European great powers. It participated in the Locarno treaties of 1926, and it guaranteed the Austrian independence against the German encroachment in 1934. It had emerged from the Depression relatively unscathed as the other capitalist nations sank, a factor which certainly contributed to the Italian overconfidence in deciding to invade Ethiopia in 1935, despite the repeated French warnings. Trotsky was particularly outraged by the move. Foreseeing the invasion in 1934, he had already authorized to begin secretly training and supporting the Ethiopian armed forces with the tacit agreement from Paris. In an unprecedented move, the French allowed masses of Soviet military advisers to land in the strategic French colony of Djibouti en route to Ethiopia. When the invasion finally came, feeling that Italy was being gradually lost to the opposing camp and was becoming a potential threat of its own, Blum was pressured to take a stance and he ended up sending French aid to Ethiopia as well. The result was a bloody disaster for the Italians. Their attempts to move into inner Ethiopia had stalled barely after crossing the frontier, as the numerically superior Ethiopian armies descended upon them from the mountains and through the deserts. Despite the great application of firepower, the Italians were unable to make progress. Instead, the Ethiopian Empire launched its own counter-offensive in 1936, and while it did reach its goals militarily, it did a superb job at demoralizing the Italian forces and generating a real fear that the Italian colonies in East Africa may be soon lost. The remainder of 1936 was spent in a de-facto stalemate with small alternating gains by both sides. The Italian army was outraged - they were promised a short and victorious campaign, not a replay of World War 1 trench warfare in the hot depths of Africa.
At the same time, the world economic crisis finally started to catch up to Italy. Mussolini, of course, blamed it all on Roosevelt, who had wasted no time in applying economic sanctions on Italy as soon as it invaded Ethiopia in 1935. And while there was definitely truth to that, the Italian economy also had very serious problems of its own, as it had been accumulating contradictions for well over half a decade. As it turned out, the aggressive government bailout of failing Italian banks in 1931 and sweeping and inefficient government projects lacking overall direction (such as the "battle for land") had not truly solved Italy's problems, as it was hoped and first appeared. Instead, it gave an illusion of normality while the problems persisted and grew behind the scenes. The deficits in the balance sheets of the Italian banks had now been translated into deficits of the Italian budget, which was already overblown by the aggressive militarization and the war in Ethiopia, and Italy began to rapidly accumulate debt. While clearly dangerous, Mussolini's government felt it had other choice as to take the risk, for at least the Italian debt was relatively cheap at the time. This all began to change, however, soon after the application of American and French sanctions on Italy in 1935. This quickly raised the price of the Italian debt and put pressure on the Italian currency, the Lira. Finally, as the war dragged on in Ethiopia and as the American and much of the world economy experienced a new (albeit short) wave of depression in 1937, the Italian government budget had clearly exceeded its capacity to continue maintaining the status quo, and the economy sank into a rapid meltdown. The government was forced to re-evaluate the Lira, until then pegged to the American dollar, several times. But this had resulted in hyperinflation, wage delays, massive layoffs, and bankruptcies. It was also a huge drop in the purchasing power of ordinary Italians, particularly the urban workers in the North and West of the country, who had never had any great love for Mussolini in the first place. As the government desperately needed to improve its financial standing and as riots began to spontaneously erupt in several cities, creating a real threat to public security, the government urgently sent a delegation to Ethiopia to negotiate peace. But it was too late, and the negotiations proved nearly futile. Fully aware of Italy's weakness and impending collapse, Ethiopia had little reason to come to a negotiated agreement with Rome, for it was clear in Addis Ababa that whatever Italians refused to give, Ethiopia could take - perhaps if not now then within a year. At this point, however, the French offered themselves as "mediators" and began to apply pressure on Ethiopia to agree to peace, threatening to withdraw the French aid otherwise. The result was the Second Treaty of Addis Ababa, which was even more humiliating to Italy than the first. Italy was forced to give up its colony of Eritrea to Ethiopia, but at least it could console itself with the retention of Somalia. Mussolini knew that this treaty was his death sentence, but he was determined not to step down and continue the fight no matter what. History may move in circles, but it was better to live a year as a lion than a thousand years as a sheep, he reasoned. So where Crispi had resigned in 1896 after the Battle of Adwa among the mounting street protests, Mussolini responded to them with a show of force. It was true - despite his failures, Mussolini still had a great deal of supporters, especially among the rural south who saw him as a much lesser threat than the Communists and Anarchists who'd inevitably seize power were he to be overthrown. Compared to how the Bolsheviks were treating the Soviet farmers, the Blackshirts looked like guardian angels indeed. And as the resignations and defections rapidly mounted from the National Fascist Party, the government, and the armed forces, the stage was set for a confrontation. The French did their part in making sure that the confrontation would not be peaceful by encouraging the armed elements of the opposition to openly rebel, and supplying them with arms and supplies from across the border. To spite the French for their betrayal, Mussolini went on to sign the Pact of Steel with Germany, and gave Hitler green light to annex Austria. Not that he really needed one anyway, for Italy was by now powerless to confront Germany or anyone else for that matter. Within a couple of months, Italy was divided roughly in half between the Fascist and anti-Fascist forces, the former now receiving German aid from across the former Austrian border - now Germany's border. The Italian veteran contingent also had to be urgently withdrawn from Spain where it fought alongside the Nationalist forces, leaving the Nationalists there vulnerable and tipping the balance in the Republican favor. Italy's fortunes had sunk rapidly and low.
Yugoslavia.
Following Italy, civil wars also broke out in Yugoslavia, Belgium, and Finland for various reasons. Yugoslavia had little reason for existence after the British had withdrawn support form it in 1936, and the ethnic tensions soon became irresolvable. Belgrade tried to appease its Croat constituents by granting them greater autonomy in 1938 (Banovina Croatia) and joining the anti-Comintern pact with Germany the same year, but it was not enough to defuse to powder keg that was brewing, and appeasement served only to anger the Serbs and the Royal Army more than anything. Violent incidents became common, particularly in the ethnically mixed city of Sarajevo, which saw multiple shootings and bombings within just one month. There was a bombing of a Serb wedding procession, there was an army shooting of Croat demonstrators, there was also a bombing of the Sarajevo market perpetrated by unknown assailants. Germany had no use for Yugoslavia, and was actively fueling the unrest there by smuggling arms through the Austrian and Hungarian borders to various paramilitaries. The newly ultra-nationalist Turkey was helping its Balkan brethren as well, for they considered Turkey to be their only protection. The government reacted with further appeasement and offers of decentralization, hoping to pull the initiative away from the trouble-makers.
One offer floating around was to transform the Yugoslav Kingdom into a confederation under a personal union, akin to the British Commonwealth. Each nationality would have its own parliament responsible for local affairs, however there would also be a Yugoslav parliament which would decide on the vital issues such as foreign affairs and defense, and a common King of course. But when in early 1939 a group of angry French-backed army officers carried out a coup in Belgrade and declared a republic, Yugoslavia was over. First the Slovenes and soon the Croats and Muslim Slavs (backed by Turkey) seceded and war broke out along the ethnic lines. The government could not recognize their independence at least because much of the territory they've claimed was populated by ethnic Serbs who wanted nothing to do with their new-to-be masters and wanted to remain in Yugoslavia. France and USSR likewise pushed the new government to pursue a hawkish route by promising weapons, training, and diplomatic cover.
Finland.
Finland was put on the crossroads when the Nazis rose to power in Sweden. On one hand, Sweden was now a direct and clear threat to Finnish sovereignty. On the other, so was the Soviet Union, potentially, so the choice was very difficult to make. A series of minor diplomatic blunders by the new Swedish foreign ministry, and the Finnish Social Democratic government, elected in 1936, chose to carefully align with the Soviet Union, seeing it as a lesser threat. This came at a cost, however, as the USSR demanded that the Finns censor anti-Soviet press and allow the communists to operate freely on the condition that they obey the law. The USSR also offered an ambitious pact of territory exchange and mutual defense to Finland, offering Finland a big chunk of land in Karelia in exchange for a much smaller but very strategic territory near the approaches to Leningrad, USSR's second biggest city. The Finnish parliament debated this proposal but ultimately rejected it as not serving Finland's interests. The main problem with the proposal was that the chunk of territory near Leningrad which the Soviets demanded was to cut through the first branch of the so-called Mannerheim line, which was a Finnish line of fortifications along the Soviet border. The line was considered very strategic by the Finns, and the loss of any part of it would substantially decrease the Finnish defensive capability vis-a-vis the Soviet Union. The Soviets insisted, however, and a long series of negotiations began between Helsinki and Moscow over the possibility of redrawing their mutual border. In the meantime, with Soviet help, the leftist forces in Finland had rebuilt themselves into a capable force, and re-awakened the scars and divisions of the Finnish society dating back to the civil war of 1918. The Finnish SDP government was not blind to this growing danger, but could do little for the fear of upsetting its Soviet neighbor.
In 1938, taking cue from the German Anschluss of Austria the previous year, Sweden put pressure on Denmark for a political union between the two countries. Denmark, led by a Social-Democratic government at the time, had absolutely no interest in such a union, and was guaranteed independence by France and the USSR. But with Sweden, Germany, and Britain all putting pressure the Danes at the same time, and only the Norwegians, with their tiny military, being in sufficient geographic proximity to offer any help, the Danish government saw itself as having no choice but to step down, leaving the army to assume control. The army then followed a familiar script - it allowed the Swedish forces to enter the country and set up bases, while promising to hold a referendum on the issue of joining Sweden. King Christian X of Denmark, who refused to approve of the referendum on "Danish anschluss" was forced to flee to France, where he found refuge and declared the anschluss illegal. Few Danes heard his voice, however, as the new government introduced sweeping censorship. Denmark was then effectively partitioned between the three powers. The UK took Iceland, Greenland, and Faroe islands, Germany took Northern Schleswig, and Sweden took the rest. The annexation of Denmark caused a panic in Finland, but emboldened the right-wing forces at the same time. In fall of 1938 they brought down the SDP government and called for a snap election. The hotly contested election campaign in the winter resulted in a victory of right-wing forces, partially due to their increased popularity (the SDP government was blamed for economic mishandling and passivity in foreign policy), but mostly due to the fact that the traditional SDP and Agrarian vote was now partially taken by the Finnish Communist Party, backed by Moscow. A national unity government was thus formed, headed by Ryti's liberal NPP party, which included all the moderate parties but excluded the FCP, PPM (Patriotic People's Movement), and the SNSP (Swedish National Socialist Party). The new government then decided to stop relying on the Soviet Union so much, a policy which was seen as toothless and dangerous, with Sweden treating Finland as a de-facto Soviet ally, the possibility of Finland turning into a battlefield between Sweden and the USSR did not appeal to anyone. Ryti then decided to pursue a more neutral policy and try to please everyone, hoping that this would help avoid the repeat of the Danish experience or worse scenarios. After all, the Swedish Nazi ideology emphasized the idea of a Nordic Union, and the Finns were not Nords themselves. The government also decided to investigate the activities of the FCP, suspected of planning an insurrection of some sort. Its suspicions were true, more true than anyone had realized, but when the police raided the FCP headquarters and local branches with a permit to investigate the party's activities, they didn't find any direct evidence to implicate it in wrongdoing, only circumstantial evidence and suspicious behavior. Nonetheless, they've decided that it was enough to take the FCP leaders into custody. An attempt to arrest them, however, did not succeed as the suspects evaded arrest amid a pitched battle. The actions of the police, however, set in motion an unpredictable chain of events which unfolded with lightning speed. First, there were small groups of demonstrators on the streets protesting the police activity. Next, there was a mob marching through the city waving red flags - clearly mobilized by the FCP for the occasion. Then there were clashes with the police, and finally by the next morning it was all over - all the administrative buildings in the capital were seized by armed groups under FCP's control, and the government fled west, then north, as the "revolution" spread across the country. The army was too late to react and was thrown into disarray, so it had to quickly retreat north together with the government, while suffering a large number of defections in its ranks. Yet, it didn't collapse and didn't go far, and it in a few days it returned with a determination to teach the reds a lesson for the second time. Marshal Mannerheim was appointed commander in chief, and he emerged as the most powerful man in "White Finland", sidelining Ryti's civilian government and acting effectively on his own. Finland was now set to relive the horrors of the 1918, possibly on an even greater scale than before.
Belgium.
The final victim of the growing European crisis was Belgium. Originally formed with the French help and intended as a Catholic buffer state, Belgium was always divided between its Flemish and Walloon constituency. Its independence was also guaranteed by Britain, who stepped in to defend the country in 1914, and won the sympathy of a large number of Belgians. When the obvious cracks began to emerge in the Belgian social fabric in 1930s, it was highly indicative of the larger cracks emerging between the European Great Powers. With the Nazis now in power in Netherlands advocating the concept of "Greater Netherlands", and with the additional support of Germany and the UK, the so-called Orangist movement in Belgium was greatly strengthened. This led to the growing polarization of the Belgian society and the effective death of Belgian parliamentarian. The elections of 1936 produced a deeply polarized parliament. The Flemish community, angry at the government's handling of the depression, voted overwhelmingly for the Flemish National Union, while Wallonia was divided between Catholics, Liberals, and Labour. Being the single largest party in parliament, the King had to invite FNU to form a government, however the FNU did not find sufficient support to form a ruling coalition. Thus Belgium went almost two years without forming a new government. After the German anschluss of Austria in 1937, the King authorized a new election hoping to resolve the deadlock. None such relief was forthcoming, however, as the election of 1938 produced a new parliament which was just as polarized as the previous, except this time the Labour party and Communist party emerged as clear leaders in Wallonia. The King then appealed for unity and invited a Liberal candidate Janson to try to form a government, hoping that he can gather enough support from the opposing factions. When that failed, the task was handed to a known moderate Socialist Paul-Henri Spaak, who finally received the backing of the Moscow-sponsored Communist party and formed a minority government. The FNU, however, feeling cheated and excluded despite being the largest fraction in parliament, and with no other legal means of pursuing its goal of Greater Netherlands, the FNU declared a boycott of parliament. In its absence, the parliament began passing laws vehemently opposed by the Flemish community, but these were vetoed by the King. As the political violence and assassinations took an increasingly sectarian dimension, King Leopold found himself in an unenviable position. His attempts to personally intervene on the behalf of the Flemish community in order to avoid a full sectarian clash had only run into anger and hate from the Socialist-led government, who saw the FNU as a traitorous and alien organization seeking the demise of the Belgian state. Soon the King began to feel that the Walloons now viewed him, too, as a British trojan horse (Leopold III came from the same royal house as the British monarchy), and no longer as a unifying leader of Belgium. And as the left-wing government exerted ever more pressure on him to stop interfering in governance or resign, the King finally gave in and resigned in January 1939, leaving the government to eagerly proclaim a republic. The referendum on the issue was not to be held since it was feared that the Flemish outnumbered the Walloons and could restore the monarchy. Furthermore, the security situation in the country was so poor that the government had a legitimate excuse not to hold the referendum at this time. Immediately, armed groups began taking over Belgian cities and the army disintegrated into Flemisish and Walloon parts as the former refused to obey their new commander-in-chief, President Camille Huysmans. The French and Belgian governments hoped that the appointment of Huysmans to Presidency by parliament would help placate the Flemish constituency and remove some support from the FNU, but the Flemish by and large considered him a traitor and sellout and refused to deal with him. Consequently, Belgium became torn apart between its two communities at each others throats.