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  1. Why was not Spain and Portugal involved in World War II with either side? Was not Franco sympathetic with the Axis powers given the help they offered during the civil war?

  2. Also, given their strategic geographical locations with the ability to limit access the Mediterranean, being a possible landing point for the allies to access France from the south. Or the Germans could have used their access to the Atlantic to build naval bases. The question is why did not any faction from the war invade the peninsula for their advantage?

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Hitler for Franco in 1940: "I prefer to have three or four of my own teeth pulled out than to speak to that man again!" - See: Spain in World War II –  Yannis Rizos Jan 21 '13 at 3:44
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In "Mein Kampf," Hitler opined, "We stop the endless German movement to the south and west, and turn our gaze toward the land in the east...If we speak of the soil of Europe today, we can have primarily in mind the soil of Russia and her vassal border states."

He was concerned primarily with conquering Russia and eastern Europe. Fought France and Britain (enemies from World War I) as needed, but basically had no quarrel with, or interest in Spain and Portugal. It was better for Germany to have a (moderately) "friendly" country there than an outright enemy, especially given how well Franco's troops had fought in the Spanish civil war.

The Allies similarly had no "issue" with Spain or Portugal. They wanted to defeat Germany, and retrieve France and other occupied countries. But since Germany had little interest in Spain and Portugal, neither did they.

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+1, in fact it was France and Britain who declared war on Germany (because of German eastward expansion!), not the other way around –  kubanczyk Feb 25 '13 at 9:42
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Spain was involved in the invasion of the soviet union by sending 15k troops called "Blue Division". In order to not putting his relations to western democracies at risk, Franco set having the involvement limited to the eastern front as a condition.

Already before WWII, ongoing from 1936, Germany supported Franco's forces during the civil war with secretly sending volunteer air force units, known as "Condor Legion".

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