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Is there a variant where instead of being unoccupied, neutral SCs contain an army which always has HOLD orders?

What difference would this make to gameplay? (Other than slowing the first few years down)...

It'd make life a bugger for Italy

What does the army do when it's dislodged?

I suppose it disbands.

I'm sure there is one - have a look on the Dip-pouch variants database (if it's running).
I know there are quite a few that have Switzerland as a neutral garrisoned SC.

Would be better if adjacent neutral forces support hold each other.

I've actually played this (it's a variant suggested in the rulebook). We found it very unbalanced.