brian brian
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I think it would have been hard for the U-Boats to improve on the results of the "Happy Time". There were only so many U-Boats, and they were already devastating during that period. A Spanish entry into the war would have positive knock-ons for the U-Boats later when there were more of them, and Hitler certainly built a lot of them, more even than WiF players will. Operating from Ferrol would increase their safety from Allied land-based air as they transited into and out of port - where many were lost historically. They were safe in the "pens" but not transiting the Bay of Biscay. Access to ports such as Ferrol, Cadiz, and possibly the French Moroccan ports would also increase their patrol times on the southern convoy routes and in the Caribbean (once the Type IX boats went operational), and more patrol time would mean more success.
That would leave the possibility of better German surface raids, of which there were several during this time period. Home Fleet would still be Home Fleet; if anything Home Fleet might be stronger in this scenario and it would not be completely simple for German surface assets to transfer to Gibraltar, especially en masse. I would say some would make it just fine; those that historically docked in Brest (2 BB, 2 CA) could be presumed to possibly reach Spain safely but not all of them (X on Bismarck), and Hitler would still have raging paranoia about Norway. But once in Spain they also gain additional protection from Allied air, as compared to French bases, where they could not stay.
And in WiF when the Axis get to command the pink ships, they tend to appear on the South Atlantic convoy routes pretty quickly as the Spanish have some nice enough CA counters for surface raids. All this flying and sailing around probably still doesn't leave much fuel for the Italians (or anything hypothetically captured from the French - the 20/20 historical hindsight that makes Mers-el-Kebir all the more tragic) to be out sailing around however.
With the historical pressure developing as a result of the U-Boats operating from Brittany (Happy Time), the British without Gibraltar might well have been forced to stop regular convoy routing between the UK and South Africa at some point, and the operational range of convoy escorts would also become an issue - probably resulting in Britain renouncing the treaty with Portugal and seizing the Azores. All of this would lead to more routing through South American waters and the Caribbean and every WiF player knows more sea zones transited means more Convoy Points needed. (Actually a good CW strategy in general in the game already)
A Spanish entry into the war would force anything based at Gibraltar to go ... somewhere. Thus Mediterranean Fleet might have been reinforced as well. The Royal Navy would still be quite strong in the eastern Mediterranean I think; they would still attempt to interdict Axis supply and would still be effective at that, though in direct correlation to distance from Alexandria most likely (Tripoli / Tunis a little safer, Bardia / Tobruk not so much). Cunningham would still be Cunningham and perhaps a loss or evacuation of Malta might have actually given him a little more freedom of action as he couldn't use Malta as much of an offensive base at many points anyway, though the RN did have to keep it in supply. The German moves we are projecting might have also resulted in the UK leaving Greece on their own, which changes little from history except making Cunningham (and Egypt) stronger.
What would suffer would be the combat effectiveness of the Royal Air Force in that theater, with supply links to the UK now longer and under more pressure (still an Allied Air Bridge across Central Africa?) Fliegerkorps X was already fairly successful in the theater historically, in terms of hurting the Royal Navy and getting Axis supply to Africa _sometimes_ if not all the time. Same would be true for the Army, as noted no Tiger convoy would be possible and everything would arrive via the Cape route. Though perhaps the South Africans might not have committed as many troops to Egypt.
I kicked around the idea of a new ground theater in NW Africa but I think with so many dynamic events already occurring in History in this period (Egypt / Libya, Yugoslavia / Greece, Syria / Iraq) I think any forces involved would be small on each side and then any result is possible. The Free French could have likely held onto Dakar themselves (as Warspite notes any Spanish move on a French colony would instantly end the fiction of Vichy and then "France" = DeGaulle) but I'm not so sure they could have threatened to re-take an Axis/Spanish Morocco.
So in short a Spanish entry into the war would give the Axis some solid advantages in the eastern Med but not a slam-dunk victory. Home Fleet and Mediterranean Fleet would still both be strong checks on Axis desires. The Italian forces would still be the same and there wouldn't be enough Germans to do everything...
...because ultimately Hitler basically took over the nascent Nazi Party in that Beer Hall on the premise that Germany's destiny lay in the East. The Nazis' first opponent in the realm of armed violence was the German Communist Party. Hitler was going to attack Russia and not Spain. Italy invested more in Spain than Germany I think but the Condor Legion was not an insignificant thing either. Hitler may have wished for a simple alliance with Spain on his side but I just don't see any way he would green-light an attack on the country. I wouldn't say he "didn't want to", I would say the thought never even crossed his mind. He expected Churchill to eventually fall out of power and the British to ask for Peace as they hated the Communists too.
I think the game should allow this line of play, but I don't find it all that appealing to play myself (DoW on Spain, though other ideas about the Med, yes), just as I think the Ukraine optional is pretty much a farce. Posit some sort of restored monarchy / General Staff cabal now running the German war effort with no SS brutality everywhere and the Germans probably do win WWII in a short war (not much of a game), because they would sensibly end the war, satisfied with a very large Reich (Austria, Alsace, Lorraine, Bohemia, bits of Slovenia, the Courland, possibly a rump Polish state now moved in to the Ukraine, and an array of vassal states through all of the Balkans and Baltics) and German Honor restored; the Allies would feel the same. Maybe this would even have shown the Japanese racial militarists the light as well, who knows.
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RE: The Italian Spear - 
RE: The Italian Spear - 
), USSR might have not attacked until well into 1944...maybe 1945. 
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