Italy should be neutral until France falls, if they haven’t declared war by turn 3 then they must declare war against the allies, and no allies can attack Italy until it is at war.
This is just to fully explain people’s options in the game but the obvious thing for Italy to do is attack as soon as it is able. Otherwise they’re only making 10 IPCs a turn and they need more income than that. This rule could also be a bit of an answer to people’s complaint about the UK Atlantic fleet getting wiped out G1. Since Germany has a strong incentive to bring Italy into the war ASAP it might want to commit more aircraft to the battle for Paris than it would otherwise. This would leave more UK boats left alive in the Atlantic.
Plus the attack on the Italian fleet is not a real risk for the UK. Even if it loses everything in the Med, it can rebuild it. It has the income to do that at the beginning of the game. Hell, even if they don’t have the income, the USA just has to commit a bit more resources to supplement the UK’s Atlantic fleet. If the Italians lose half their fleet they will NEVER be able to rebuild it. They need a strong initial fleet to capture Africa and get bonus objectives to make more income. They need more income to rebuild a navy. You see this vicious cycle. And say what you want about the random chance of dice, but, statistically, the UK should make this move every game. They have a 95% chance of wiping out the Italian boats and only a 9% chance of having nothing left themselves.
The only way to counter this is for Germany to make a massive Sea Lion buy it’s first turn. This is before it even knows what the UK is going to do. If the UK moves it’s carrier, tac bomber, and destroyer to z110 it then renders Germany’s buy absolutely moot and a complete waste. This will also waste an entire turn for Germany because it should have been making buys against the Soviet Union and now it needs to wait until it has sufficient forces to hit Russia.
So you are left with these two options as the Axis. You either lose half the Italian navy and leave it crippled for the rest of the game or waste an insane amount of time and resources with Germany. Given the fact that this game is about the Axis making large gains in the first few turns, it seems completely counter to the purpose and intent of the game overall.
The easiest way to fix all of this is to simply leave Italy neutral until its turn after the fall of France. Bam! Fixed.