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.
History of Austria
In 1745, following the reign of the Bavarian Elector as Emperor Charles VII, Maria Theresa's husband Francis of Lorraine, Grand Duke of Tuscany, was elected Emperor, restoring control of that position to the Habsburgs (or, rather, to the new composite house of Habsburg-Lorraine), Francis holding the titular crown until his death in 1765, but his empress consort Maria Theresa carrying out the executive functions. The Pragmatic Sanction of 1713 applied to the hereditary possessions of the Habsburgs and Archduchy of Austria but not the position of Holy Roman Emperor, which could not be held by women, thus Maria Theresa was Empress Consort not Empress Regnant.