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So what is the event or mechanism that allows Italy to flip to an Allied status? Is it in fact a new nation altogether (not using the Axis Italy codes and stuff)?

Italy doesn’t really ever flip diplomatically.

Once Italy is conquered by the allies and Rome is held. A new Italy joins the allies.

It is possible for Italy to be conquered but then not flip to the allies until Rome falls.

Thanks. I was trying to find this new Italy in the scripting and could not. I guess that is what I am looking for.

Thanks for that last statement. Helpful.

I assume you mean when Italy surrenders to the USA and there are not enough German units near Rome to have them seize the remaining Italian territory. If so then here are the surrender scripts:

#NAME= DE 382 - USA: Italy's National Morale falls below 1% (100%)
#POPUP=
#MESSAGE=
#IMAGE=
#SOUND=
#FLAG= 1
#TYPE= 1
#AI= 0
#LEVEL= 0
#COUNTRY_ID= 115
#TRIGGER= 100
#DISPLAY_ORDER= 0
; Set global variable condition to always trigger (dummy value)
#GV= 1[1,100]
; Set link value to always trigger (dummy value)
#LINK= 0[0]
; Set decision value
#DECISION= 382
; Set how many MPPs should be collected over X turns if player selects 'yes'
#MPP_UPDOWN= 0
#MPP_TURNS= 0
#MPP_TEXT=
#NOTES=
#NOTES_POSITION=
; Set AI acceptance % (AI will accept 100% of the time)
#AI_RESPONSE= 100
#AI_RESPONSE_POPUP=
#DATE= 1939/09/01
#TEXT_RGB= 0,0,0
#SHADOW_RGB= 0,0,0
; Ottawa is in Allied hands
#ALIGNMENT_POSITION= 20,46 [2]
;Set National Morale Trigger (dummy value)
#NATIONAL_MORALE_TRIGGER= 59 [1]
; Set variable conditions:
; USA politically aligned with Allies and fully mobilized
#VARIABLE_CONDITION= 115 [2] [100] [0]
; Italy politically aligned with Axis and not surrendered
#VARIABLE_CONDITION= 59 [1] [100] [0]
; Set condition position:
; 1 Allied unit within 8 hexes of Rome
#CONDITION_POSITION= 101,53 [8,8] [1,1] [2] [0]


#NAME= DE 382 Italy Surrenders (Italy -> USA) (100%)
#POPUP= <<TAG_25>>
#IMAGE=
#SOUND= italy_surrender.ogg
#FLAG= 1
#TYPE= 1
#AI= 0
#LEVEL= 0
; Set global variable condition to always trigger (dummy value)
#GV= 1[1,100]
; Set link value to always trigger (dummy value)
#LINK= 382[1]
#COUNTRY_ID= 59
#RECIPIENT_ID= 115
#ARMISTICE= 0
#REMOVE= 3
#TRIGGER= 100
#DATE= 1939/09/01
; Set variable conditions:
; 1st Line - USA politically aligned with Allies and not surrendered
; 2nd Line - Italy polically aligned with Axis and not surrendered
#VARIABLE_CONDITION= 115 [2] [100] [0]
#VARIABLE_CONDITION= 59 [1] [100] [0]
; 1st Line - No German unit in Rome
#CONDITION_POSITION= 101,53 [0,0] [0,0] [1] [45]