The Spanish Civil War had profound implications both for Spain and for Europe as a whole in both the political and military realms, with the economic consequences a little less definable.
After Germany’s National Socialist Party, the Nazis, consolidated its hold on power, it increased its commitments to fascist parties in other countries, especially Italy, where fascism had taken hold much earlier (the Fascist Party of Italy, under the leadership of Benito Mussolini, had taken power in 1922, more than a decade before Adolf Hitler would be made chancellor of Germany). The situation in Spain, however, was widely viewed as more indicative of the direction of Europe’s future. In July 1936, Spanish military officers, led by General Francisco Franco, instigated a political coup against the leftist Republican government in Madrid. The ensuing civil war would see Spain become the focal point for a major confrontation with Western liberals and communists (including the Soviet Union) rallying to the Republican side, and, most significantly, the German Nazi regime coming to the aid of the Nationalist side (the faction represented by the right-wing military officers). Individuals identifying with communism, as well as mainstream liberals alarmed by the right-wing coup in Spain, migrated to that country and took up arms in defense of the Republic. In the meantime, Germany, under Hitler, did not hesitate to initiate major military support for the Nationalists, and the civil war became a major proving ground for Nazi Germany’s newly developed weapon systems and tactics.
The political effects of the Spanish Civil War, then, lay in the sense of isolation felt by Spanish democrats, who were left essentially alone save for the volunteers from the rest of Europe, including Germany and Austria, who coalesced around the Republican cause under the banner of the International Brigades, and the military and intelligence support provided by the Soviet Union. The Soviet Union, while wielding a potent intelligence service proficient at special operations and assassinations, however, was incapable of providing large-scale military support in the form of large numbers of tanks and fighter aircraft (and the pilots to fly the aircraft). Geographically remote from the Iberian Peninsula, it was considerably more difficult for the Soviet Union to supply the Republicans than it was for the Germans to support the Nationalists. While Soviet transports did deliver several dozen tanks and around 18 aircraft to the Republicans, such support was dwarfed by the military means the Germans were able to bring to bear against those forces. Additionally, the increasing disillusionment among some – nowhere near enough, but some – Western leftists towards the brutal practices of Soviet leader Joseph Stalin resulted in less support for the Republican cause than otherwise might have been the case. Politically, the Spanish Civil War came to be seen as a microcosm of the confrontation between fascism, represented by Hitler, and communism, represented by Stalin. While Spain would remain neutral during the Second World War, fascist control of the country would remain in effect well into the 1970s.
Militarily, the effects of the Spanish Civil War were more apparent. As noted, Germany had entered the war on the side of the Nationalists at its outset. The newly-rebuilt and modernized German Army exploited the conflict to experiment with its technologically-advanced fighter-bomber aircraft and with the tactics that would be used at the start of the world war. The German Condor Legion, flying Heinkel He-51 biplane bombers as well as advanced Junkers Ju-87 “Juka” bombers, protected by Messerschmitt Bf-109B fighters, carried out large-scale air strikes against Republican forces and cities. The Soviets would begin to supply advanced bombers, mainly the Tupolev SB, which was a very fast and capable bomber, but German military support overwhelmed Soviet military support, including in the provision of light tanks and artillery, both quantitatively and qualitatively, helping the Nationalist forces to defeat the Republicans. The main military effect of the war, then, was to present the rest of the world with an introduction to the type of warfare the Germans had been able to develop, with bombing runs by Ju-87s emerging as particularly alarming. The Spanish Civil War was, in effect, the German military’s "coming-out party." It had emerged from the humiliations of the post-WWI armistice mandates (mainly, those provisions of the Treaty of Versailles intended to punish Germany while restraining its ability to rearm) with the most formidable military in Europe (although the French would make the mistake of remaining convinced of their own enduring military superiority – a notion that would be unmistakably undermined when Germany invaded France in 1940). The Soviet Union, meanwhile, would be suitably impressed itself with the military proficiency of the German Army, forcing it to consider its diplomatic steps very carefully.
The economic effects of the Spanish Civil War were devastating for Spain. As is always the case with war, the national treasury was depleted – a situation seriously aggravated by the Soviet Union’s demand that its military support be paid-for in gold. Additionally, Stalin convinced the Spanish to ship much of its remaining gold reserves – over 500 tons -- to Moscow "for safe keeping." Needless to say, the gold was never returned. Of course, the fact that Spain was ruled by a fascist dictatorship for 40 years made it easy for the communist Soviet Union to ignore Spanish requests for the return of its gold. Spain’s economy, consequently, would suffer for years to come, partly due to the loss of its gold reserves, and partly due to economic mismanagement. For the rest of Europe, the Spanish Civil War was an event best left to the Spanish and their respective allies in Moscow and Berlin. The British wanted to stay out of it, and France was already experiencing serious political divisions of its own that mirrored the situation in Spain. Leftists were sympathetic to the Republicans; rightists, including the budding fascist party that would emerge as the Vichy Government in 1940, were rhetorically supportive of the Nationalists. Practical support, however, was nonexistent.