Austro-Italian ironclad arms race
Seizing upon the decline of the Regia Marina in the years immediately after the Battle of Lissa, Tegetthoff worked to continue the efforts of Archduke Ferdinand Max of expanding the ironclad fleet of the now Austro-Hungarian Navy. Tegetthoff found political allies in the Austro-Hungarian Minister of War Carl von Franck and retired Admiral Bernhard von Wüllerstorf-Urbair. Wüllerstorf's and Franck's primary arguments in favor of continuing with the ironclad program Austria had engaged in prior to the Seven Weeks War lay largely along economic grounds. The two believed that constructing new ironclad warships would rejuvenate Austria-Hungary's economy following the defeat at the hands of Prussia and Italy, and that such a fleet would help to open up new commercial opportunities in the Levant and the Middle East. These proposals would be shelved however while Austria continued to reel from the military defeats inflicted by Prussia, and several cabinet reshufflings by Emperor Franz Joseph I resulted in a government more interested in pursuing revenge against Prussia than constructing new ironclads, which would be of little use in a hypothetical second war with Prussia.
War of the Bavarian Succession
Count Karl-Wilhelm Finck von Finckenstein, Frederick the Great's prime minister, believed that any Austrian acquisition in Bavaria would shift the balance of power in the Holy Roman Empire, diminishing Prussia's influence. Prussia's recent gains had been hard-won: thirty years earlier, Frederick had engaged in protracted wars in Silesia and Bohemia, resulting in Prussia's annexation of most of Silesia, and now, with the economy and society modernizing under his direction, Prussia was emerging as a world power. In the Silesian Wars and the Seven Years' War, Frederick had earned a new, if grudging, respect for his kingdom's military and diplomatic prowess from the European powers of France, Russia, Britain and Austria. To protect Prussia's status and territory, Finck and Frederick constructed an alliance with the Electorate of Saxony, ostensibly to defend the rights of Charles II August, Duke of Zweibrücken.