@Adiloi Yes, theoretically this could continue. But the Axis would gain so much income from this exchange that the Allies would not recover, and eventually attrition will stop UK from being able to retake since they won’t be able to buy new units and Germany will.
Of course it can. It makes no difference that originally it was a neutral territory. Its current status is a territory of the United States and therefore, with an IPC value of two,it can be a location where a minor industrial complex can be placed.
That’s the thing-I don’t think national objectives imbalance the game, especially in the Europe version where the Soviets are almost guaranteed to get 9 IPCs a turn after going to war.