Why did the winners continue to tolerate and trade with Franco’s fascist regime?
Well, why wouldn’t they?
Historically, countries have gone to war (excluding civil wars) for one of two reasons:[ul]
[li]Defensively, if they – or one of their – allies is attacked or invaded.[/li][li]Aggressively, to conquer land for their own gain.[/li][/ul]The Allies in WW2 fought against Germany, Japan, and Italy because Allied nations were attacked, either directly (France by Germany, US by Japan), or indirectly (UK had treaties with Poland, so declared war when Germany invaded that country). In each case, there was a direct threat. Franco’s Spain (and Salazar’s Portugal next door on the Iberian Peninsula) maintained neutrality during WW2, although Spain favored the Axis at the beginning of the war and the Allies at the end, and Portugal sold resources to both sides throughout the war.
Despite the brutality of the Spanish Civil War, and the Nazi involvement therein, it didn’t involve invasion of one sovereign nation by another. So, why would the OP expect that the Allies would “liberate” it? It wasn’t like France or the Netherlands in being an occupied country, nor like Germany or Italy in being one of the aggressive occupying forces. What possible motivation would an Allied military commander have, once he’d liberated SW France up to the Pyrenees, to say “let’s invade Spain”?
Franco maintained a stable state that didn’t threaten other countries, and played fairly well on the international stage. Although he was a dictator, he had support from a very large percentage of Spanish citizens. Although we can look back now and say that Spain has improved by leaps and bounds since his death, it’s not a universally-held belief within Spain, and it’s hard to see how any post-WW2 power would have wanted to invade Spain to effect “regime change” against a country that wasn’t threatening anyone.
Let’s face it, if Franco were still alive (or had passed his dictatorship to a “Franco Jr”), and in control of a country that didn’t threaten anyone else, would there be a call in the global community to effect a “regime change” by military invasion? If so, on what grounds?
I would have thought that the results of recent 21st-Century adventurism would tend to argue against invading countries that don’t pose a threat, purely to change a regime that doesn’t fit one’s own ideology. There are plenty of countries in the world ruled by dictators – does the OP suggest that “regime change” be effected upon each of them? Who’s going to do it? What are the acceptable losses on each side?