However, now Italy has actually entered Egypt and its units cannot be attacked by the British. Note, air units may not attack Italian units in Egypt, in Libya, or in Italy.
The first image shows a British unit unable to attack an Axis Major Power in Egypt, Italy, as they are at peace.
The second image shows the War Panel, Italy is at peace.
In my opinion, this is a bug and not a feature
This is a PBEM game and, as the Allied player, I wanted to see how far this will go.
