The Empire pursued the policy of non-intervention for a while, which significantly damaged its prestige.
The falling prestige was used by PM Sofoulis to limit the powers of the Emperor.
However, both the Emperor and the PM agreed on the need to interfere agaist the Fascists in Italy, especially since Italian fleet had recently been destroyed by the Austrians.
The independent republic of Venice, established when Italy had been defeated by the Franco-American alliance, was quickly defeated and submitted to the Empire, who thus avenged the Fourth Crusade.
Both the Liberals and the Socialists agreed that the government needs to prevent the excesses of capitalism on the stock market.
The Italians were unable to cross over to Sicily, having to accept Imperial occupation of it as a fait accompli.
The Russian Revolution shook the world, and the Empire worried about Soviet Union troops in the Balkans - what if they attempted to "smash the reactionary regimes of the Balkans?"
However, these fears proved to be baseless, as the Soviet regime fell due to being massively unpopular in the countryside. The Russian liberals, who briefly seized power, were unable to maintain it agaist the Fascist pressure of Russian ex-emigre officer corps.
Meanwhile, the Empire established an African colony in Western Sahara.
Inspired by the Russian example, the fascist groups attempted to seize power in the Empire, but the PM and leading generals were against the fascists and prevented all their attempts at a coup.
Italian colonists from overpopulated Sicily (it accounted for almost a third of Imperial population) migrated to the Balkans, especially to Constantinople itself, where they were well received by the Imperial government, who attempted to "de-turkify" the city further.
Unfortunately, Imperial control over Sicily lasted only nine years. In 1935, the resurgent Italian Fascists poured over the straight of Calabria and easily smashed the numerically inferior Imperial forces. The Empire had to quickly end the war in order to prevent the loss of its Venetian protectorate. The only remnants of the second Imperial ownership of Sicily were the Italian immigrants in the Empire proper.
The humiliation of the Empire and the resurgence of Nationalist China, who managed to recover Northern China from a Japanese puppet, meant a drastic loss in Imperial influence worldwide. Even the installation of friendly regime in Transylvania and the Hungarian remnants on the Danube failed to prevent that.
The weakened Empire could, however, rely on the patronage of other democratic powers, alarmed at the rise of fascism in Russia, Italy and Austria.
The Fascists, however, were making alliances of their own.
It was clear that the upcoming decades might be decisive for the world's future... but the restored Empire was entering the new world as only a secondary power.