While indeed the world was at war, not all the countries in it were at warnote . Some states and nation-states deliberately decided to remain neutral or non-belligerent throughout the whole war. We will only take into accountnote the states that retained their neutral status from beginning to endnote and which were not invaded or occupied by Allied or Axis forces.
Ireland
Ireland, in spite of still being nominally linked to Britain through the Commonwealth, adopted a very strict form of neutrality, due to Éamon de Valera, the Taoiseach, refraining from joining either the Allied powers or the Axis powers. Considering the possibility of either a German or a British invasion, his party, Fianna Fáil, supported him from beginning to end.
Such neutrality was based on a pursuit of a delicate balance: the strict observance of non-alignment and the taking of practical steps to repel or discourage an invasion from either of the two concerned parties. These practical steps were mostly done through unpublicizeed contraventions, in cooperation with the Allies, such as the exchange of intelligence and information and the permission to use the Donegal Corridor.
While most of the population supported this stance, there was a sizeable minority that favoured fighting against the Axis powers. Irish citizens could serve in the British armed forces and at least 50,000 (of a male population of combat-age of 1.5 million, i.e. about 4%, though it's worth noting that many of these found the steady wage very attractive at that time of high unemployment) did so by joining the British Army, Royal Air Force, and Merchant Navy. Those with objections to serving in the British Army joined the French Foreign Legion before the occupation of France, or later, the American forces. Members of the Defence Forces who deserted to fight with the British and Allied forces suffered some discrimination after the war, losing their rights to pensions and barred from holding government jobs.note Massive unemployment and depressed wages in Ireland also meant constant emigration for seasonal agricultural and war work in England - one Irish labour organisation estimated nearly 400,000 Irish men working in southern England in the run-up to D-Day, mostly involved in construction of aerodromes and encampments (and that doesn't count the tens of thousands of young women in domestic service).
This period of war is called The Emergency in Ireland. The Emergency Powers Act came into effect two days after the German invasion of Poland, after being approved by a hastily convened Dáil and was modelled on the British draft worked out during the Sudeten crisis. With sweeping executive powers being granted, de Valera's cabinet took immediate action and approved harsh measures, such as censoring radio newscastsnote and weather forecasts being halted to preclude the inadvertent assistance of planes or ships involved in the war. Public expressions of opinion appearing to favour one side or the other were repressed and even the word 'war' itself was avoided, with the Government referring to the situation in Europe from 1939 to 1945 as 'the Emergency'.
While the economic and social conditions got very harsh, there was an increased boom in the black market and cross-border smuggling, which would have an impact later on during The Troubles.
Speaking of the Troubles, there was a real danger of the IRA provoking an end to Ireland's status and re-opening the wounds of the Civil War, as well as the fear of the United Kingdom, eager to secure Irish ports for their air and naval forces, using the attacks as a pretext for an invasion of Ireland and a forcible seizure of the assets in question. The S-Plan
(to help Germany defeat Britain through a terrorist campaign in the latter) was devised and was being carried out at the orders of Seán Russell. De Valera, who had tolerated the IRA throughout The Dirty Thirties, responded with the Offences Against the State Act, which led to an increasing fight against any subversive activity that might endanger the security of the state.
Russell, in May 1940, travelled to Berlin in an effort to get arms and support for the IRA and to receive training in German ordnance, but died on a submarine while returning to Ireland as part of Operation Dove. A small number of inadequately-prepared German agents were sent to Ireland, but those that did arrive were quickly picked up by the Directorate of Military Intelligence (G2). Active republicans were interned at the Curragh or given prison sentences, while six men were hanged under newly legislated acts of treason and three more died on hunger strike. The IRA was barely alive during the latter stages of the war.
The Free State, like Britain, was affected by the air bombings done by the Nazis, Dublin being particularly affected. West Germany later paid a compensation of more than £300,000. There was also rationing, which was actually more severe than in Britain. (The tea ration was notoriously only a quarter of the British ration, which hit the country hard. A thriving black market grew based on trading the Belfast tea ration for unrationed luxuries in Dublin.) Ireland was largely dependent on the export of livestock, dairy and agricultural labour, and the difficulties of switching to tillage and insufficient imports caused a health crisisnote and very nearly a famine in 1942.
There was also a proposal made by British envoy Malcolm MacDonald to end the Partition in 1940, while the Battle of France was happening (and even after that), in exchange for Ireland abandoning its neutrality stance. However, the intense distrust between the government of Ireland and the government of Northern Ireland (who immediately accused Westminster of "betraying Loyal Ulster") prevented this.
This stance also had mixed effects, such as the constant need to avoid the aforementioned hypothetical invasion by Britain, since the Irish ports were, at the early stages of the War, vital to British military capability and trade safety.note At the same time, the Irish government also refused to close the German and Japanese Legations, and de Valera signed the book of condolence on Adolf Hitler's death on 2 May 1945, leading to him personally visiting Ambassador Hempel, following the usual protocol on the death of a Head of State of a state with a legation in Ireland. This led to protests in the US and a propaganda coup for anti-Irish newspapers in Britain, but the reasoning was simple - de Valera had extended exactly the same courtesy to the US on the death of Franklin D. Roosevelt a few weeks earlier, and not to do so would violate Ireland's neutrality.
One particular source of difficulty for Ireland throughout the war was that it was an island nation heavily dependent on international trade to meet its needs that was trying to maintain its neutrality in the middle of the Battle of Atlantic, where Britain and Germany were trying to strangle each other's shipping. Ireland mostly depended on British shipping and, where applicable, British maritime insurance in peacetime. The former was largely cut off, not only because Britain needed shipping for its own wartime needs, but also as a means of applying pressure to Ireland for more cooperation. The latter insisted on Irish ships meeting British wartime requirements (blacked out ships, sailing in convoys etc.) which were forbidden to neutrals in wartime at the pain of losing the legal protection of neutral powers (neutral ships were required to sail with clear identifications—including bright lights at night time—and could not accept protection of a combatant navy, among other things). Ireland addressed the first by obtaining a number of ships via sale, lease, or subterfuge (including 3 Estonian ships that were in Ireland when Estonia was taken over by the Soviets—in a spirit of cooperation, Ireland made two of these available to Britain). To meet the latter, Ireland created a government-run finance company that provided insurance for its own ships. While both British and Germans generally respected the neutrality of Irish ships, several were still attacked and/or sunk by neglect, mistake, or malice, while trading with Britain, on the Atlantic sea lanes (by German submarines blockading Britain), or in the Bay of Biscay on the way to/from neutral Portugal and Spain (by British bombers blockading German occupied French ports).
After the War, the Cranborne report was written, and, while the relations between the UK and Ireland were fairly stabilised, there was also criticism by de Valera in regards to Iceland's occupation by Britain.
Portugal
In 1386, the Treaty of Windsor had been signed between Portugal and England, beginning what is the oldest alliance still in force. This pact of mutual support would become vital to both Portuguese and British interests during the course of the war.
António de Oliveira Salazar, Prime Minister of Portugal, while remaining on friendly terms with the Axis powers, knew two things:
- He could not risk being invaded by Germanynote , and
- He had to respect the treaty, especially since the UK could invoke itnote .
With this in mind, Portugal first signed a treaty of friendship and non-aggression with Francoist Spain in March 1939, and, a month later, refused the invitation of the Italian Ambassador to join the Anti-Comintern Pact, an alliance between Germany, Italy, and Japan. A year later, Spain and Portugal signed an additional protocol to the Treaty of Friendship and Non-Aggression which also became known as the Iberian Pact. Basically, the Iberian Pact committed the two countries to defend the Iberian Peninsula against any power that attacked either country and helped to ensure Iberian neutrality in the event of a general European war. Needless to say, this protocol was protested against by Hitler.note At almost the same time, Portugal had ensured the evacuation of 2,000 Gibraltarians to the Madeira Island, some of which lived in the island for the rest of their lives and married Portuguese people.
In order to not piss off Nazi Germany, Portugal had to keep diplomatic and trade relations intact, hereby leading to basically Playing Both Sides: by selling tungstennote while being put under pressure from both sides (Portugal was the main European producer during the War), Portugal ensured that it profited both economically and militarily, the latter by both receiving German aircraft and signing an agreement of military co-operation with Britain that led to accepting direct British support in the rearmament and modernization of the Portuguese Armed Forces.
This military agreement led to Portugal allowing British and American flights landing in airbases in the Azores archipelago, and, later, the lease of bases to the British (the Lajes Air Base being the most noteworthy case, which was later leased to the USAAF and USN). This was a key turning point in the Battle of the Atlantic, allowing the Allies to provide aerial coverage in the Mid-Atlantic gap and helping them to hunt U-boats and protect convoys. In 1945, a new air base, called Lajes Field was built in the Azorean island of Terceira, and it is still being used today for American and Portuguese military operations (though to a lesser extent when compared to this War and the Cold War). As the war became more and more in favour of the Allies, Portugal started to sell less tungsten to the Germans, in spite of protests from the German ambassador.
Lisbon became, according to several American reports, "the Capital of Espionage". The Portuguese secret police, PVDE (later PIDE) allowed both Allied spies and Axis spies to act in the city, hereby retaining their neutral status, as long as no one interfered with local politics. Writers such as Ian Fleming were based there, while other prominent people such as the Duke of Windsor and the Spanish Royal Family were exiled in Estorilnote . German spies attempted to buy information on trans-Atlantic shipping to help their submarines fight the Battle of the Atlantic, while a Spanish double agent, Juan Pujol Garcia, better known as Codename Garbo, passed on misinformation to the Germans, hoping it would hasten the end of the Franco regime. William Colepaugh, an American traitor, was recruited as an agent by the Germans while his ship was in port in Lisbon.
While most colonies were well protected and remained secure, Timor-Leste was occupied by Dutch and British forces until it was invaded by the Japanese in 1942. The Japanese met with Portugal in Mozambique soon after and gave them back after peace had been delivered, though they still used the seabase there. In early 1943 British and Commonwealth nations bombed and occupied Timor until 1945 when they officially raised the Portuguese flag over the territory. Many Timorese and Portuguese people died during the invasion and the occupation.
One last thing: in spite of Salazar not allowing the emissions of visas to Jewish people, one diplomat in Bordeaux, France, named Aristides de Sousa Mendes, managed to issue around 30,000 visas to Jewish and non-Jewish people (including entire families) in a few days, allowing them to pass the border and go to Portugal. Later, most of them emmigrated to the US and Brazil. Aristides is one of two Portuguese persons who are part of the Righteous Among the Nations, although he died some years after the war, after he and his family paid a very heavy price.
Spain
The Spanish State under Francisco Franco was officially non-belligerent during the War. This was meant to show two things: 1) That it was still reeling from the effects of the Spanish Civil War. And 2), that it could manage to offer some degree of economic, material and military assistance to the Axis Powers without pissing off the Allies. Only after the tide of the war appeared to turn against the Axis during the winter of 1942-3, with Allied victories in the Caucasus and eastern Ukraine and North Africa, did the government started leaning slowly towards the Allies.
There was also a need to remain neutral, since the government was divided between Germanophiles and Anglophiles. One thing that is also noteworthy was the fact that Spain had a debt to Germany of $212 million for supplies of matériel during the Civil War, and, as such, could have joined the Axis side at any given point. Indeed, in June 1940, after the Fall of France, the Spanish Ambassador to Berlin had presented a memorandum in which Franco declared he was "ready under certain conditions to enter the war on the side of Germany and Italy". At first, Hitler, convinced that he would achieve a quick victory, did not encourage Franco's offer. However, after the Battle of Britain, he promised Franco help in return for its active intervention. This had become part of a strategy to forestall Allied intervention in north-west Africa. Hitler promised that "Germany would do everything in its power to help Spain" and would recognise Spanish claims to French territory in Morocco, in exchange for a share of Moroccan raw materials. However, Franco responded warmly, but without any firm commitment.
In fact, there is speculation among historians that Spain managed to remains neutral due to a bluffnote . Hitler and Franco met at Hendaye, France on 23 October 1940 to fix the details of an alliance. By this time, the advantages had become less clear for either side. Franco asked for too much from Hitler. In exchange for entering the war alongside the alliance of Germany and Italy, Franco, among many things, demanded heavy fortification of the Canary Islands as well as large quantities of grain, fuel, armed vehicles, military aircraft and other armaments. In response to Franco's nearly impossible demands, Hitler threatened Franco with a possible annexation of Spanish territory by Vichy France. At the end of the day, no agreement was reached.note
There were also quite a few cases of espionage and sabotage. As long as Spain permitted it, the Abwehr – the German intelligence organisation – was able to operate in Spain and Spanish Morocco, often with cooperation of the Nationalist government. Gibraltar's installations were a prime target for sabotage, using sympathetic anti-British Spanish workers. One such attack occurred in June 1943, when a bomb caused a fire and explosions in the dockyard. The British were generally more successful after this and managed to use turned agents and sympathetic anti-Fascist Spaniards to uncover subsequent attacks. A total of 43 sabotage attempts were prevented in this way. A German agent in Cádiz was the target of a successful Allied disinformation operation, Operation Mincemeat, prior to the invasion of Sicily in 1943.note
However, the main part of Spain's involvement in the war was through volunteers. When Germany invaded the Soviet Union, Franco agreed, after much diplomatic pressure, to send some manpower to do civilian warwork and volunteers to fight against the Allies. Hence, the Blue Division was sent. The Blue Division was trained in Germany and served, with distinction, in assisting the deaths of half a million Soviet civilians in the Siege of Leningrad. Notably, in February 1943 General Infantes' 6,000 Spanish troops held up as many as 30,000 Soviet troops for a day - sadly, these were attacking under the cover of a flawed artillery barrage and with insufficient direct-fire assets (tanks, self-propelled artillery). By holding out until German SS and Army reinforcements arrived, the Spaniards thwarted the Polar Star offensive to lift the siege. In October 1943, with the German Army under severe pressure in the central-western Ukraine and another winter offensive looming in Army Group North's sector, the bulk of the Blue Division left for home (ostensibly as a result of Anglo-American diplomatic pressure) leaving a token force until March 1944. In all, about 45,000 Spanish served with Army Group North, mostly committed volunteers, and around 4,500 died. The Soviets' desire for revenge against Franco - for contributing as much as a twentieth of the force that killed several hundred thousand Soviet citizens - was frustrated at the Potsdam Conference in July 1945 wherein Stalin's attempt to make an Allied invasion of Spain the conference's first order of business was categorically rejected by Harry Truman and Winston Churchill. War weary and unwilling to continue the conflict, Truman and Churchill persuaded Stalin to instead settle for a full trade embargo against Spain.
On the other hand, many Republican veterans and civilians joined the French Foreign Legion at the start of the War, making up a sizeable proportion of it. Around sixty thousand joined the French Resistance, mostly as guerrillas, with some also continuing the fight against Francisco Franco. Several thousand more joined the Free French Forces and fought against the Axis Powers. Some sources have claimed that as many as 2,000 served in General Leclerc's Second French Division, many of them from the former Durruti Column. There were plenty of leftist refugees who decided to join the Red Army or operate as partisans behind the German lines.
In the end, despite being non-belligerent throughout the war, Franco's regime of open support to the Axis Powers led to a period of post-war isolation for Spain as trade with most countries ceased. U.S. President Franklin Roosevelt, who had assured Franco that Spain would not suffer consequences from the United Nations (a wartime term for those nations allied against Germany), died in April 1945. Roosevelt's successor, Harry S. Truman, as well new Allied governments, were less friendly to Franco. A number of nations withdrew their ambassadors, and Spain was not admitted to the United Nations until 1955.
Sweden
By the time World War Two broke out Sweden had maintained political neutrality for more than a century, ever since the last series of ideologically-charged wars to sweep the continent (and a customary Swedish-Norwegian War). Hitler's designs upon the political domination of Europe and a new racial order within it meant that he and his opponents all wanted certain things from Sweden - be it the end of Sweden's political independence and the use of her people as settlers within eastern Europe, or the end of Sweden's lucrative sales to Nazi Germany. Sweden appeased both sides in a successful bid to profit from the conflict and avoid being drawn into it, initially contributing large quantities of materials critical to the German war economy (particularly steel and steel ball-bearings) and gradually easing off the sale of these products as Germany's power waned and aiding Germany made Sweden more and more unpopular overseas. Sweden was one of the few European countries which actually profited from the war, sowing the seeds of her postwar prosperity.
Sweden was one of the few nations which managed to trade with both Allied and Axis countries, and got a special permit from both the UK and Nazi Germany. However, both of these nations plus the Soviets on a number of occasions managed to sink a few trading ships. The volume of trade was drastically reduced as a consequence of the blockades in the North Sea.
When Finland was invaded by the Soviets in the Winter War, the Liberal, Conservative, Social Democratic and Agrarian parties were concerned about a perceived threat from the Soviet Union. Initially, the Communist Party was openly loyal to the Soviet Union and supported its Molotov-Ribbentrop Pact with Germany. However, when Germany invaded the Soviet Union in June 1941, they swung around to a pro-Allied view.
While many Swedes openly supported some level of involvement in Finland on both humanitarian and military levelsnote , the Swedish government declined to engage militarily with the Red Army as it advanced during the Winter War, despite several pleas from the Finnish government. However, Sweden declared itself "non-belligerent" rather than neutral during the conflict and as many as 8,000 Swedes voluntarily went to Finland to fight. The Swedish government and public also sent food, clothing, medicine, weapons and ammunition to aid the Finns during this conflict.note In addition, Sweden received some 70,000 Finnish children who were sent to Sweden to find safety during the 1940s.
Since iron ore deposits, mined in Sweden and shipped through Norway, were important for the Nazis, there were various plans by Allied forces to seize those deposits as well as some harbours. Since the Nazis thought that the Allies would not respect Norwegian neutrality, they made their own plans for an invasion of Norway in order to protect their strategic supply lines. On April 9, 1940, Germany launched Operation Weserübung, an operation with the ambitious objective of simultaneously occupying Denmark and Norway, and to stage a coup d'état in Norway. This move had several far-reaching consequences for Sweden. Sweden was in effect cut off from trade with the western world and therefore more dependent on German goodwill, ultimately leading to permittenttrafik, but it also lessened the immediate risk that Sweden would become a theater of war between the Axis and the Allies. 50,000 Norwegians fled to Sweden and were sent to refugee camps in the southeastern part of the country. There was also some training among Norwegian and Danish forces in order to recover the respective nations.
One of Germany's demands of Sweden, as Germany's invasion progressed, was that Sweden was not to mobilize. However, Sweden re-organized its system of mobilization to allow for personal order by letter to be made possible as an alternative to official proclamation, so that 320,000 men were able to be raised in a few weeks. This was called "The Organization" and was barely different from a full mobilization when completed. Sweden also started to build fortifications at the Norwegian border and along the coast of Scania.
During its invasion of Norway, Germany demanded access to the Swedish telephone and telegraph lines between Germany and Norway. Sweden allowed this, but tapped the lines. In the early summer of that year (1940) the Swedish mathematician Arne Beurling succeeded in deciphering and discovering the source codes of the Geheimfernschreiber cypher machine that Germany used, which afforded the Swedes advance knowledge of Germany's military intentions.
Prior to the German invasion of the Soviet Union on 22/6/1941, the Germans asked Sweden to allow the transportation of armed German troops including their 163rd Infantry Division (commanded by General Erwin Engelbrecht) and their supplies and military equipment through Swedish territory by train from Norway to Finland. The Swedish government agreed. In Sweden, the political deliberations surrounding this are known as the Midsommarkrisen ("Midsummer Crisis")note .
From late 1941 and into early 1943, Germany began to meet with a series of military reverses at Moscow, Stalingrad, the Caucasus, eastern Ukraine, and El Alamein. After the western Allies landed in Italy that July and the Soviet summer offensives (Kutuzov, Rumyantsev, Lower Don, etcetc) began pushing the Germans back that August, Sweden was in a much better (and improving) position to resist German demands and soften its stance to Allied pressure. Despite Germany's defensive posture and losing status, Sweden continued to fear German retaliation well into 1944. With Germany's weakening position came stronger demands from the Allies, who pushed for Sweden to abandon its trade with Germany and to stop all German troop movements over Swedish soil. Sweden accepted payments from the Allies to compensate for this loss of income through reduced trade with Germany but continued to sell high-quality steel, ball bearings, and other machined parts to Nazi Germany at inflated smugglers' rates.
In 1943, Sweden received nearly all of Denmark's 8,000 Jews. With the dissolution of the Danish government in the summer of 1943, the German authorities had decided to deport Denmark's Jewish population to extermination camps. However the Danes successfully ferried all but 450 of the Jews across the straits between Copenhagen and the Swedish mainland, across waters patrolled by German Schnellboots, in an unprecedented rescue effort. Once in Sweden, the Danish Jews were granted asylum and taken in by Swedish families. Many stayed in Sweden after the war. Sweden also received refugees from Finland and Norway, including some of Norway's Jews. All this, as well as the protection of Sweden's own Jewish population, was made possible by Sweden's neutrality.
In the aftermath of the War Winston Churchill openly accused Sweden of ignoring the greater moral issues and playing both sides for profit during the conflict, particularly regarding its supply of steel and machine parts to Nazi Germany throughout. However, setting aside the dubious morality of helping a regime of war-mongering racist genocidal maniacs in their attempt at world domination, such claims use a different definition of the word "neutral" from that defined in the 1907 Hague convention (which set out the rights and duties of belligerents and neutral countries). Sweden may have had a 'moral' imperative not to help the Nazis, but it didn't have a 'legal' one forcing it not to.
In January 1946, Sweden forcibly transferred to the Soviet Union over 146 Baltic and 2,364 German soldiers who had been interned in Swedish prison camps. At least seven of the internees committed suicide at their camp in the village Rinkaby, Kristianstad, Skåne, rather than allowing themselves to be sent via Sweden to Siberia - where they had a non-trivial chance of dying anyway.
Switzerland
Switzerland has been the most consistently neutral state in the world. However, the megalomania, racism, and general evil-ness of Hitler meant that his supporters and opponents exerted great pressure on Switzerland to take a stand either for or against him. Switzerland did neither, instead claiming neutrality while making a tidy profit from selling high-quality manufactured products to aid the German war effort.
As soon as the War began, the Swiss mobilized. The entire country was fully mobilized in three days and positions were fortified throughout the countrynote .
The German Army drafted some tentative plans concerning an invasion of Switzerland, such as Operation Tannenbaum, but in 1941 they were shelved for two months so Germany could defeat the USSR. Two months after Germany started, but hadn't quite finished yet, her war with the USSR the plans were postponed for another three months. Then in 1942 the plans were postponed for a year. Then in 1943 the plans were shelved indefinitely.
In contrast to WWI-era strategy, during WWII the Swiss rejected a static defence of their borders in favour of organized long-term attrition and withdrawal to strong, well-stockpiled positions high in the Alps known as the National Redoubt. This controversial strategy was essentially one of deterrence. The idea was to cause huge losses to German forces and render the cost of invading too high. During an invasion, the Swiss Army would cede control of the economic heartland and population centres, but retain control of crucial rail links and passes in the National Redoubt.
Switzerland was able to remain independent through a combination of military deterrence, economic concessions to Germany, and good fortune as larger events during the war delayed an invasion. Attempts by Switzerland's small Nazi party to effect an Anschluss with Germany failed miserably, largely as a result of Switzerland's multicultural heritage, strong sense of national identity, and long tradition of direct democracy and civil liberties. note
At the same time, they managed to both engage in diplomatic and trade talks with both the Allies and the Axis, while allowing espionage between them two to ensue (as long as it didn't interfere in internal Swiss matters, in a way similar to what Portugal did).
Due to repeated violations of their airspacenote , Switzerland had to shoot down several German aircraft. The Swiss shot down 11 Luftwaffe planes between 10 May 1940 and 17 June 1940. Germany protested diplomatically on 5 June 1940, and with a second note on 19 June 1940 which contained clear threats. Hitler was especially furious when he saw that German equipment was shooting down German pilots, as the Swiss purchased over a hundred Messerschmitt fighters for their air defenses before the war. He said they would respond "in another manner". On 20 June 1940, the Swiss air force was ordered to stop intercepting planes violating Swiss airspace. Swiss fighters began instead to force intruding aircraft to land at Swiss airfields. Anti-aircraft units still operated. Later, Hitler and Hermann Göring sent saboteurs to destroy Swiss airfields, but the sabotage team was captured by the Swiss army before it could cause any damage.
Allied aircraft also intruded on Swiss airspace during the war, mostly Allied bombers returning from raids over Italy and Germany that had been damaged and whose crews preferred internment by the Swiss to becoming prisoners of war. Over a hundred Allied aircraft and their crews were interned. They were subsequently put up in various ski resorts that had been emptied from lack of tourists due to the war and held until it ended. At least 940 American airmen attempted to escape into France after the invasion of Normandy, but Swiss authorities intercepted 183 internees. Over 160 of these airmen were incarcerated in a prison camp called Wauwilermoos, which was located near Lucerne and commanded by a pro-Nazi Swiss officer.
Due to constant interference from both Allies and Axis in their airspace, the Swiss had declared a zero-tolerance policy for violation by either Axis or Allied aircraft and authorized attacks on American aircraft. Nonetheless, there were a couple of bombings (by the Allies for the most part) on cities such as Basel and Zurich (though, thankfully, without too much damage and casualties).
As a neutral state bordering Germany, Switzerland was easy to reach for refugees from the Nazis. However, Switzerland's refugee laws, especially with respect to Jews fleeing Germany, were strict and have caused controversy since the end of World War II. From 1933 until 1944 asylum for refugees could only be granted to those who were under personal threat owing to their political activities only; it did not include those who were under threat due to race, religion or ethnicity. On the basis of this definition, Switzerland granted asylum to only 644 people between 1933 and 1945; of these, 252 cases were admitted during the war. All other refugees were admitted by the individual cantons and were granted different permits, including a "tolerance permit" that allowed them to live in the canton but not to work. Over the course of the war, Switzerland interned 300,000 refugees.
After the war, controversy sparked about Switzerland's financial relationships with Germany. The fact is, Switzerland's trade was blockaded by both the Allies and by the Axis. Each side openly exerted pressure on Switzerland not to trade with the other. Economic cooperation and extension of credit to the Third Reich varied according to the perceived likelihood of invasion, and the availability of other trading partners. Concessions reached their zenith after a crucial rail link through Vichy France was severed in 1942, leaving Switzerland completely surrounded by the Axis. Switzerland relied on trade for half of its food and essentially all of its fuel, but controlled vital trans-alpine rail tunnels between Germany and Italy. Switzerland's most important exports during the war were precision machine tools, watches, jewel bearings (used in bombsights), electricity, and dairy products, as well as weapons such as Oerlikon autocannon. A large quantity of militarily important goods were sold to both sides through the double blockades under terms negotiated in detail, again with both sides, with a system of permits as with Sweden. As Allied bombing campaign mounted, some Nazi leaders preferred this arrangement as Swiss factories manufacturing goods for Germany could not be legally bombed by the Allies—although at least some "accidental" raids on Swiss soil fell on areas where factories supplying Germany were located.
In 1995, the World Jewish Congress sued Switzerland to get back the money it had taken from Nazi Germany's seizure and sale of European Jews' assets including lands, shares, jewelry, and teeth. Switzerland eventually settled the matter out of court, paying considerably in excess of a billion USD to more than 400,000 claimaints.
Until 1936, the Swiss franc was the only remaining major freely convertible currency in the world, and both the Allies and the Germans sold large amounts of gold to the Swiss National Bank. Between 1940 and 1945, the German Reichsbank sold 1.3 billion francs worth of gold to Swiss Banks in exchange for Swiss francs and other foreign currency, which were used to buy strategically important raw materials like tungsten and oil from neutral countries. Hundreds of millions of francs worth of this gold was monetary gold plundered from the central banks of occupied countries. note The Swiss contribution to Germany's war effort has been put at some 0.5% of the total German output.
However, this figure is (deliberately) deceptive in much the same way as the way that Anglo-American Lend-Lease aid has been valued at some 4% of the Soviet war effort. The goods provided to both were sophisticated and expensive to produce, meaning their real value to their war efforts was out of proportion to both the amounts provided and their market price. Both powers also avoided the 'opportunity cost' of producing the goods for themselves; every good given to them allowed them to focus on other goods. For example, the provision of boots and spam to the USSR allowed Soviet agriculture to forgo animal husbandry and focus almost exclusively on producing the grain they needed to feed their people. Likewise, purchasing Swiss detonators allowed the Germans to pour more of their armaments-funds into the other components of the shells and bombs they used to kill Allied civilians and soldiers. This was particularly important to Germany because many of the 13 million people that it enslaved and utilised, in many cases unto death, during the war were mere farmers, shop assistants, housewives, and schoolchildren: most lacked the technical know-how required to make complex products, and malnutrition and disease affected the productivity of those who did. This is quite apart from the problem of deliberate 'mistakes' and active sabotage, which the Nazis could always be sure did not apply to Swiss components.
And the Rest
Afghanistan, Andorra, Bhutan, Liechtenstein, Vatican City, Tibet, and Yemen also maintained formal neutrality throughout the war. Notably all of these nations are monarchies of one stripe or another.noteThe three European microstates persisted at the pleasure of their neighboring/surrounding Axis overlords, as due to their lack of resources or military power they were of little value to the war effort.
Tibet benefited from the turmoil of China's concurrent civil war and fight with Japan (and the fact that technically no nation even recognized it existed as an independent nation).note
"Yemen" at this time only consisted of the northern half of the current nation, as the southern half was a British protectorate.
