In 1937, the Nationalists, under the leadership of Francisco Franco began to establish their dominance. An important element of support was their greater access to foreign aid, with their German and Italian allies helping considerably. This came just as the French ceased aid to the Republicans, who continued, however, to be able to buy arms from the Soviet Union. The Republican side suffered from serious divisions among the various communist and anarchist groupings within it, and the communists undermined much of the anarchists' organisation.
With his ranks being swelled by Italian troops and Spanish colonial soldiers from Morocco, Franco made additional attempts to capture Madrid in January and February 1937, but failed again.
On February 21 the League of Nations Non-Intervention Committee ban on foreign volunteers went into effect. The large city of Málaga was taken on February 8. On March 7, the German Condor Legion equipped with Heinkel He 51 biplanes arrived in Spain; on April 26 they bombed the town of Guernica (Gernika) in the Basque Country; two days later, Nationalist General Emilio Mola's men entered the town.
After the fall of Guernica, the Republican government began to fight back with increasing effectiveness. In July, they made a move to recapture Segovia, forcing Franco to pull troops away from the Madrid front to halt their advance. Mola, Franco's second-in-command, died in a plane crash on June 3, and in early July, despite the fall of Bilbao in June, the Republican government launched a strong counter-offensive in the Madrid area, which the Nationalists repulsed with some difficulty. This was the Battle of Brunete (Brunete is a town in the province of Madrid).
Franco soon regained momentum, invading Aragon in August and then taking the city of Santander (now in Cantabria). On August 28, the Vatican recognized the Franco government.[1] Two months of bitter fighting followed and, despite determined Asturian resistance, Gijón fell in late October, effectively ending the war in the North. At the end of November, with the Nationalists closing in on Valencia, the government moved again, from Valencia to Barcelona.