World War II Scenario-Spain Joins the Axis-June 1940

What actually happened: The Spanish Nationalists were widely considered allies of Germany and Italy.  The Germans and Italians pretty much made Nationalist victory possible in the Spanish Civil War.  The  Nationalists did help the Axis in various ways in the early part of World War II, and they did send a division of 'volunteers' to fight on the eastern front.  However, Spain was careful not to go too far in their support of the Axis, and they quietly backed away from the support they did give as it became obvious that the Axis was going to lose.  Most importantly, the Spanish didn't allow German troops to go through Spain to attack Gibraltar when Hitler wanted them to in fall of 1940, and they also didn't allow the Germans to go through Spain and Spanish Morocco to counter the Allied landings in French North Africa.  Franco respected British and later US power too much, and Spain was too dependent on food and oil imported from areas the Allies could interdict.  He also was afraid that the British would seize the Canary Islands, which they would have.  Also, once the Germans signed an armistice leaving France with their North African colonies they didn't have much to give Spain to get the Spanish into the war. 

 What might have happened: General Franco was too cautious to jump into the war the way Mussolini did, but a different Spanish leader might not have been.  When France started to fold, and the British army was pushed off the continent at Dunkirk, it looked to Mussolini as though the way was wide open to seize big hunks of the French and British empires at little risk.  The Germans appeared to have won, and the Italians felt that it was time to seize the opportunity to be in on the liquidation of the two empires.  Let's say that someone less astute than Franco was in charge of Nationalist Spain, maybe as a result of Franco taking a bullet early in his career during the Rif War.  The Spanish leadership reaches the same conclusion that Mussolini did historically and Spain enters the war.
    So, both Spain and Italy both jump into the war on the German side in June 1940.  Neither country would have much immediate impact on the course of the war.  France was falling, but Italy and Spain wouldn't be able to speed up that fall much.  If Spain entered the war, the French might have somewhat less leverage in the armistice talks because Spanish Morocco would be a potential base for German attacks on French North Africa if the French tried to fight on from there, but generally the armistice would not change too much.  The Spanish would probably end up disappointed by the armistice, just as Italy was.  However, Britain had something Spain wanted very much: the Rock of Gibraltar.
    The Spanish were probably not strong enough on their own to tackle Gibraltar—primarily because they lacked air power and heavy artillery, so presumably they would ask for German and Italian help.  Hitler would initially be cool toward any involvement in Spanish plans, because he would still hope to reach a settle with the British.  As it became apparent that the British weren't going to settle, he would come to see attacking Gibraltar as a way to put pressure on the British without the risks of a Sealion, or as a complement to Sea Lion.  Initially, however, he would probably leave Gibraltar to the Spanish and the Italians
    Mussolini would undoubtedly see an attack on Gibraltar as a way to salvage Italian military prestige after the poor Italian showing against the French in the Alps in June 1940.  He would probably send the Italian aircraft that historically attempted to help the Germans in the Battle of Britain to Spain instead.  There, they would try to close Gibraltar off from the outside world.  They would also try to help Spain get supplies to the Canary Islands using Italian submarines and transport planes.  Italian surface ships would not be able to intervene in any battle for or siege of the Canary Islands until Gibraltar was suppressed. 
    Spanish Morocco was right across the strait from Gibraltar, and Axis planes there and in Southern Spain could theoretically let the Axis close the western end of the Mediterranean to Allied surface ships by making it very difficult for the British to move ships through the straits.  In the initial Spanish and Italian led stages, the British would probably be able to get ships through.  As the Germans got involved that would become nearly impossible.
    The Spanish-held Canary Islands would be a major strategic prize in this scenario.  The British had plans to seize the Canary Islands if Spain entered the war.  In late June and July of 1940 the British were at a low ebb militarily, but they needed to somehow show that they were still in the war.  Historically they did that by bombarding the French fleet to prevent it from falling into German hands.  In this scenario they would probably substitute some kind of attack on the Canary Islands.  The Spanish navy couldn't prevent a British attack, but the British didn't have a lot of trained and equipped soldiers to actually take the islands.  The islands were a big enough prize that the Germans would intervene in any fight for them if they could figure out a way to.  

  I would love to write more, but this is getting long.  I'll finish it in a second post when I get more time.  In the meantime, feel free to comment as always.