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.
Seven Years' War
Britain now threatened to withdraw its subsidies if Frederick did not consider offering concessions to secure peace. As the Prussian armies had dwindled to just 60,000 men and with Berlin itself about to come under siege, the survival of both Prussia and her King was severely threatened. Then on 5 January 1762 the Russian Empress Elizabeth died. Her Prussophile successor, Peter III, at once ended the Russian occupation of East Prussia and Pomerania (see: the Treaty of Saint Petersburg (1762)) and mediated Frederick's truce with Sweden. He also placed a corps of his own troops under Frederick's command. Frederick was then able to muster a larger army, of 120,000 men, and concentrate it against Austria. He drove them from much of Silesia, while his brother Henry won a victory in Saxony in the Battle of Freiberg (29 October 1762). At the same time, his Brunswick allies captured the key town of Göttingen and compounded this by taking Cassel.