Nova Monarquia (English : New Monarchy) was a totalitarian regime, on a format of the old absolute monarchies implanted by Nazi Germany after the invasion of Portugal, code named Operation Isabella, because of Salazar's decision to stick with the Anglo-Portuguese alliance, the longest in the world and Portugal refused the invitation to join the Anti-Comintern Pact, which made a good excuse to Adolf Hitler to put the exiled Portuguese king in the throne of Portugal.
The Nazis began with the occupation of Porto, Lisbon and Setúbal and had the country under control within two weeks. Then, they occupied the Madeira and Azores archipelagos, being the Azores a key place to control the Atlantic in a war.
António de Oliveira Salazar Estado Novo, which was a fascist regime too, was replaced with the Nova Monarquia, with Salazar exiled in São Paulo Brazil, and Manuel II came back from his exile, after the end of the Monarchy for the Republican regime and Salazar Estado Novo.
In 1940, Manuel II came back from his 32-year exile and was crowned King of Portugal again. In the day of his coronation, Hitler stood by his side in his support and creating a new absolute monarchy, and King Manuel immediately decided that Portugal would take the side of the Axis powers.
Despite being exiled in England, and being very pro English, Manuel never forgive the 1880's British Ultimatum, also known as "Pink Map", so King Manuel revoked the Treaty of Windsor and announced the signature of a new treaty, this time with Nazi Germany, which he called the beginning of a "new, prosperous alliance". For him it was the beginning of what poet Fernando Pessoa described as the Fifth Empire, in which Portugal re-emerged as a powerful state. In the signature of the Treaty, on the 5 of May 1941, King Manuel said in his speech:
"This is a strange world we were born in, my friends. A world where friends betray and strangers help. A world where friends become our enemies, and strangers become our new friends."
The Azores were officially given to the Germans for them using them as a military base and even for some German immigration, to help modernize and populate the region, following similar politics of the settling of the islands, keeping like this the control of the Atlantic.
The Nova Monarquia, like Estado Novo, or even Nazi Germany, had a cult of personality around the new leader, in this case, King Manuel II. And creating a cult for the propaganda around what the regime saw as key leaders or figures, like Viriato the Lusitanian leader that resisted the Romans, the first King Afonso Henriques that launched the reconquista against the Muslim invaders, Henry the Navigator, being regarded as the main initiator of what would be known as the Age of Discoveries, João of Braganza his accession led to a protracted war (the Portuguese Restoration War) with Spain, which only ended with the recognition of Portuguese independence after 50 years of the Iberian Union, being the same house of Manuel himself and the 1st Marquis of Pombal, being notable for his swift and competent leadership in the aftermath of the 1755 Lisbon earthquake. And of course Manuel II himself. Being the key figures and cult leaders of the regime propaganda. But leaving important figures like Nuno Álvares Pereira, because it reminded the country the former alliance with the English.
Despite Portugal being one of the European countries with more Jewish influence and even moors, being 7% to 11% descendants from this groups, because of the Jewish immigration during the middle ages and then the Moors conquest of the country, being reconquered again after the start of the crusades and the first Portuguese king Afonso Henriques launched the campaign. But all of them converted to Christians after the Portuguese inquisition. And like the time of the Reconquista, launched by the first Portuguese king, a very anti Muslim sentiment was born, being always on the state propaganda. Using a very pro German propaganda, showing the Germanic/Visigoths rulers of Iberia, as good leaders to the ancient Lusitanian people, being then invaded by the Muslim/Moors invaders. Cementing even more the new alliance with Nazi Germany.
Manuel still kept some of Salazars Estado Novo regime structure, like the motto, "Deus, pátria e família" (english: God, Fatherland and Family) and he kept the secret state Police, PVDE, but even given a bigger role, like the Germans SS format, even creating and militarizing some units and divisions, like the PVDE Viriathus corps in honour of the Lusitanian leader that resisted the Roman conquest. Especially around the empire, in key places like Angola with the oil and diamonds resources being secured for the empire, and the Axis powers.
Manuel too kept the Mocidade Portuguesa (English: Portuguese youth), like in Salazar regime membership was compulsory between the ages of 7 and 14, and voluntary until the age of 25, following the model of the Italian Fascist Opera Nazionale Balilla and the Nazi Hitler Youth, but kept being a paramilitary division, unlike the way it was going.
Manuel implemented very Nazi-like politics about the Jews, despite according to Nazi law that for not being Jewish, you would have to prove that at least one great-grandfather wasn't Jewish, which the majority of the country was, especially after the inquisition. But surprisingly, a lot of Jewish people, and Jehovah's Witness (who were also persecuted in Salazar's regime) were caught practicing their faith at home in secret, and deported to the concentration camps in central Europe. Disabled, crippled people were also send to them by the new regime. Manuel, like the Nazis, went with the conclusion that doing that, they will save billions of money for the country.
Portugal colonial politics, went more racist, and exploring even more the colonies and the natives, and implanting the same treatment to disabled and crippled people they give in Europe, to the Africans, and Asian natives from the colonies. Despite still being a Portuguese colony. Macau was given to the Japanese as a military base, like the Azores to the Germans, because of Portugal's new union with the Axis powers, given a huge advantage to the Japanese invasion of China. And like this reminding the Portuguese and Japanese friendship and relationship, being Portugal the first European country to arrive and trade with Japan. But Goa was invaded by British India.
Communists, like in Salazar regime were still persecuted, but this time they were under arrest by PVDE, but then given to the SS, and send to the central Europeans concentration camps. But new camps started to be created, this time in Africa, in the Guiné Colony, and in the Asian Timor Leste.
Manuel started a great militarization and modernization of the country and in the archipelagos of the Azores and Madeira, following the Nazi like system, but using and exploring to the maximum the African and Asian resources, but at the same time creating new cities on those colonies to new German immigration that Hitler approved for the continent, being the Portuguese colonies, specially Angola with its resources, holding a lot of potential, a lot of Germans came, coming with new wave of Portuguese and even some Italian immigration, being a new land of opportunities, especially for marketers, entrepreneurs and even top Nazi scientists wanting to study the local native population of the colonies.
Portugal invaded the rest of Timor, conquering the entire island nation. This brought some tension with the their Japanese Allies, but like Macau, the Japanese could use it as a military base.
And with German support, Portugal invaded the area that the British toke on the 1880's British Ultimatum, completing Manuel revenge of what the Portuguese called at a time "national humiliation". And for Manuel this new Portugal and Portuguese empire, was Fernando Pessoa, Fifth Empire.