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Historically, Vichy France was neutral. It was neither allied to Germany nor to the Allies, but it had to collaborate with German authorities in some ways so it is often depicted as a satellite of Germany. In game terms, an ally fights on your side, which is clearly wrong in the case of Vichy France. A puppet will also be allied (though there are ways around it), so that is not a good option either. Hence in the game Vichy France is made neutral with good relations to Germany, which comes as close to the truth as possible.