Austro-Italian ironclad arms race
Austria's defeat in the Seven Weeks War forced Austria to determine a new set of foreign and domestic policies for the future, as Austria's interests since the days of the Holy Roman Empire had primarily been found in Italy and Germany. The Empire thus reformed itself into the Austria-Hungarian Empire following the adoption of the Austro-Hungarian Compromise of 1867 (German: "Ausgleich"), which re-established the sovereignty of the Kingdom of Hungary and placed Hungarians within the Empire on an equal footing with Austrians. Under the "Ausgleich", Emperor Franz Joseph I would be crowned as King of Hungary, while a separate parliament at Pest with powers to enact laws for the lands of the Holy Crown of Hungary would be established.
Military history of Germany
In the War of Austrian Succession (1740–48) Empress Maria Theresa of Austria fought successfully for recognition of her succession to the throne. However, during the subsequent Silesian Wars and the Seven Years' War, King Frederick the Great (Frederick II) occupied Silesia and forced Austria to formally cede control in the Treaty of Hubertusburg of 1763. Prussia had survived the combined force of its neighbours, each larger than itself, and gained enormously in influence at the cost of the Holy Roman Empire. It became recognised as a great European power, starting a rivalry with Austria for the leadership of the German-speaking lands.