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.
Austro-Hungarian Navy
Prior to the Austro-Hungarian Compromise of 1867, the Navy was referred to as the Imperial Austrian Navy or simply the Austrian Navy. It saw action in the French Revolutionary Wars, the Napoleonic Wars, the Second Egyptian–Ottoman War, the First and Second Wars of Italian Independence, the Second Schleswig War, and the Seven Weeks War as well as the simultaneous Third War of Italian Independence. Following Austria's defeat to Prussia and Italy during the Seven Weeks War, the Empire reformed itself into a dual monarchy with the Habsburg monarch ruling as Emperor of Austria over the western and northern half of the country that was the Austrian Empire, and as King of Hungary over the Kingdom of Hungary. The Austro-Hungarian Compromise of 1867 also transformed the Austrian Navy into the Austro-Hungarian Navy. Largely neglected by the Empire in its early years, the k.u.k. Kriegsmarine grew throughout the late 19th and early 20th centuries to become one of the largest navies in the Adriatic and Mediterranean Seas. By 1914 the k.u.k. Kriegsmarine had a peacetime strength of 20,000 personnel.
The k.u.k. Kriegsmarine saw action in the Boxer Rebellion, and the first shots of World War I were fired by the Austrian monitor "Bodrog", which bombarded Belgrade on 29 July 1914, the day after Austria-Hungary declared war on Serbia.