How about a situation whereby the Austro-Hungarian Empire sells Germany out?
The POD would be the start of the war, whereas in OTL the Austro-Hungarians hardly invested anything into their military and were carried along by Germany by most of the way (AHE military expenditure didn't even double whereas Germany's pentupled), in TTL they would been more initially enthusiastic, lets say they tripled their military expenditure (to the severe harm of their treasury) and ran a much better army.
This would allow for some easier victories towards the start of the war, but the Russian Brusilov Offencive of 1916 would have been just as effective, killing about 1.25 million AHE soldiers. However, with the slightly better trained and equipped AH army, the Russians took much more of a beating, which in turn influenced a much more successful and slightly earlier communist revolution.
At this point the Austro-Hungarians seriously begin thinking about peace. As the army that they have lost is more clearly their own, and not just the Germans taking the hits for them, they are more eager to avoid any repeats of Brusilov. And seeing as Russia has pulled out of the war and been replaced with a regime that seems to wish to stay out of Mitteleuropean politics, the Empire feels that it has achieved enough out of the war. And so by the end of the year Austro-Hungary is secretly talking to the Allies.
By the time Wilson makes his fourteen points speech on the 2nd January, the Austro-Hungarian Empire, to the shock of Germany, replies immediately wishing to end the conflict peacefully. Germany, shocked and angered, suspends its diplomats in the Empire but refuses to contemplate peace. However, after several months fighting alone Germany found its ability and desire to keep warring was greatly diminished, and so signed an armistice on the 9th September.
Germany was not permitted representation at the negotiations in Versailles, but the Austro-Hungarian Empire was. Its respresentitives used their position there to act as Germany's advocate, and indeed, they succeeded in moderating some of the allies more extreme aims, i.e. knocking a few million off of France's bill for reparations.
At the treaty's conclusion, Germany was still treated harshly, but less so than in OTL, it lost territory to France and also its former ally the Austro-Hungarian Empire. The Empire itself was ordered to submit its southern provinces to pleibiscite, and many seceded and joined the Balkan states. In addition, Austro-Hungary was ordered to implement a new constitution, more closely protecting national self-determination, the new empire consisted of a number of states roughly equivilent to the dominant ethnicity and was refounded as the Confederacy of St. Stephan, with the Hapsburg emperor remaining as a ceremonial figurehead. The Ottoman Empire was still partitioned into allied mandates.
In the aftermath of the war, the Confederacy was allowed to rebuild, and rebuild it did, becoming one of Europe's most vibrant economies. Germany suffered under the Treaty of Versailles, as in OTL, but it was eventually let off from its more damaging punishments by the fledgling League of Nations. France was resentful of the international community coming between her and her vengeance, which many interpreted and one of the reasons why France slided towards fascism in the '30s. Similarly, fascists came to power in Italy and Spain, forming what was called the Romantic Bloc. Germany fell under the sway of the Social Democrats, and stayed under their sway untill the 1960s. Germany had one of the most all-inclusive welfare systems in Europe and was widely imitated.
Upon Vladmir Lenin's death, his protege Leon Trotsky assumed control. Trotsky reversed Lenin's New Economic Policy and forced the introduction of collectivised farming in the countryside, and in the city's he encouraged communal living, ensuring that newly built flats would include courtyards for communal gatherings, he also employed more informants to secure that people with counter-revolutionary opinions were dealt with. Although perhaps Trotsky's most important policy was 'International Socialism', this involved creating and developing links with other socialist movements throughout the world. Especially strong was the Soviet-German relationship, the Soviet Embassy in Germany was a custom-built huge modernist palace, that openly funded, supported and hosted socialistic projects in the country, including exhibitions, publications and youth groups. Many countries, including Britain and the Romantic Bloc feared that Germany would one day pose a socialist threat to the whole of Europe. To counter this threat the Romantic Bloc instituted a program of intense militarisation throughout the 30s and 40s. An authoritarian corporatist regime was propped up in Poland to keep the increasingly cozy German Republic and Soviet Union apart.
The USA was mostly neutral to what was happening in Europe, in their eyes the Versailles Treaty (which was eventually ratified in the 1920s) had produced a lasting peace which had even managed to get Europe through the Depression without a major war breaking out.
In 1958, Leon Trotsky died whilst in office. He is succeeded by Andrey Vlasov, a senior general in the Red Army. Vlasov openly criticised Trotsky's communism as being soft, and concentrating too much on inconveniencing the Russian people instead of fighting the good fight against international capitalism. Opposed to Trotsky's national pluralism, Vlasov strikes to instill a strong Soviet National Identity by militarising society in general. Factories that had been used to produce creature comforts during the Trotsky-era are converted for war production. Vlasov, with his Mongoloid features and thick-rimmed glasses proves an effective hate figure in the Romantic Bloc. Meanwhile, a radical group splits away from the mainstream Social Democratic Party in Germany to found the National Socialists, a Vlasovist group that wishes to rearm Germany, retake all lost territory and crush the beourgeois Romantic Bloc. Over the next few years tensions in Europe continue to bubble up, the National Socialists win the 1961 German election after spending the last five years in coalition, Soviet guns flood in, and then, in 1963, the Romantic Bloc declares war on Germany. The Soviet Union and the Scandanavian nations jump to Germany's defence and World War Two begins.
Germany is quickly overran, and National Socialists quickly go underground and wage a guerilla war against the occupation. Britain and the Confederacy attempt to remain neutral, but as the Soviet Union takes more and more of Europe these nations may find themselves compelled...
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What do you guys think? Should I continue this?