On November 11, 1942, Germany and the United Kingdom signed the Treaty of Versailles. The signing of the agreement followed approximately two weeks of negotiations, which had begun on October 25th.
The United Kingdom had little choice; the loss of Malta in July and continued Axis success in North Africa threatened to divide the British Empire in half. With Japan threatening the Empire in the Far East, the choice was clear. It was better to retain control of a bloodied empire than no empire at all. Ever since the loss of Malta and continued challenges supplying the Eighth Army, Rommel had continued to advance in the east, capturing Alexandria and crossing the Nile. Concurrently, German leadership had come around to realize that the fate of the war lay in the East, not in the West, not in the Middle East, and not on the Northern Front.
To that end, the Peace of Versailles included the following provisions:
Peace between Finland and the Soviet Union
German Puppet Governments would be established with no more Axis occupation in: France, Norway, Denmark, Belgium, and the Netherlands
No UK Lend-Lease to the Soviets, but transfers of already-produced military equipment was acceptable
Transfer of the entire Adriatic sea coast, plus much of Greece to Italy.
No change in status between the United States and Germany.
On November 15th, Propaganda Minister Joseph Goebbels spoke at the Sportpalast and promised that Germany would ultimately win the war in the East during the Summer of 1943.
The German high command immediately made several operational changes: All occupation duties were to be undertaken by their allies, all security divisions would be converted to infantry divisions, and the entirety of the Wehrmacht would be directed to focus on defeating the Soviets in the east. Italy, in exchange for being rewarded at Versailles, fully committed to fighting the Soviets.
The Soviets had other plans. Stalin planned to fight until the last man. To that end, the Soviets planned a massive air offensive beginning on November 19th, followed by a pincer attack against Stalingrad whereby they hoped to encircle and destroy two Romanian armies and one German army while providing relief to the Caucuses. Participating in the pincer attack would be most of the Soviet mobile assets, followed by additional attacks in other parts of the front.
