Oke something is boiling in my head. The problem with Spain being Axis is that it allows the Wallies to invade Europe directly from the USA, while they normally first have to take Gibraltar (or Morocco for Africa).
So focusing on only destroying the enemy fleet is not enough anymore, as the Allied Land Forces will then liberate France. By focusing on the Land Forces you give the Allied fleet many options. It seems impossible to effectively defend Spain as the Axis, because when you build subs they build more land units, or when you build more ground forces their fleet is untouchable.
It is clear you will always should go for the counter-attack as the Axis in this case, never as the defender. Not just because they can invade in one turn, but they can can-open with USA and UK both being close behind each other.
In order to provide overwhelming force at a specific point we already have an Axis strategy: The Dark Skies, massive bombers. But bombers need to land somewhere. The Wallies can now take Portugal, Spain, Gibraltar and Morocco all in 1 turn, leaving you without safe landing spot and even after a victorious annihilation of Allied fleet their ground force can wreak havoc on the Bomber fleet.
However you have on big advantage as the Axis: Italy and Germany can both attack before the Wallies can react again. Having Italy attacking the USA forces and kill them off with Germany sounds nice, but will likely kill off the fodder with heavy losses for Italy and still a bloody battle for Germany. Also it is impossible Italy can match the economy of the USA or build big amounts of bombers and fleet.
Therefore I advocate for giving them both a role. Germany as the counter-attacker for the Allied fleets, Italy as the counter-attacker for the Allied ground forces. Germany can successfully build up enough bombers and subs to provide a decent counter-force so the USA will need to build up a huge fleet in the Atlantic (leaving Japan reign the Pacific) while Italy can handle those 10-12 land units (50% = Infantry) with their medium income (+/- 30 IPC).
Also, the more different countries the Wallies take, their forces will be more divided. Italy will just needs a ground force of lets say 4 Artillery and 6 Mech, Infantry (to allow them to relocate if Wallies give up Atlantic) with 4-6 planes to destroy the Allied Ground Forces in Spain while the Germans can then take back Gibraltar/Portugal with just 3 Tanks and 3 Mech. Infantry. Germany is able to have around 10-20 Bombers and 6-8 Subs to destroy the Allied fleet and land safely in Southern France or Normandy. Yes, when the Allies land in Morocco you can’t attack them, but you keep them out of Europe.
When Spain etc. is taken, just move your Axis ground forces back to France for the next counter-attack.
This is just an 40 IPC (4 Artillery, 6 Mech. Infantry) investment from Italy and 66 IPC (6 Subs, 3 Tanks, 3 Mech. Infantry) investment from Germany, very possible without neglecting building forces for Russia. The airforces for both Italy and Germany should already be available as you can use them against Russia / UK.
Also, you just have to make sure there are 4 Italian Artillery already in Southern France, you can build the 6 Mech. Infantry in Northern Italy just the turn before you think the Wallies will invade (24 IPC in T3/4 is very possible) while Germany only needs 3 Mech. Infantry in Normandy and can build the 3 Tanks (18 IPC) just the turn before you think the Allies will invade. This allows you to last-minute and cheaply buy your defence of Europe against the Wallies and before that can just focus on Russia.
What do you guys think?