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What is the effect on game play of these services being separate "Nations"?

That they use separate devices, replacement pools, aircraft and such.

Thanks for the quick response.

The rest of the story:

"nationality" is to some extent "service" insofar as there are three US and two Japanese "nationalities"

Nationality determines if a unit will regenerate: only Philippines and Netherlands nations land units will not regenerate

Nationality comes with a modifier - something like a combat proficiency rating - the same unit rated as Philippine or US Army will have different combat performance - Philippine being lower. The actual values of these modifiers are not documented.

Nationality also affects other sorts of combat - and damage control - again on an undocumented basis. But we are told in the Forum by programmers that USN has a better damage control value than IJN does.