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.
18th-century history of Germany
In the War of the Austrian Succession (1740–48) Maria Theresa fought successfully for recognition of her succession to the throne. But in the Silesian Wars and in the Seven Years' War she had to cede 95 percent of Silesia to Frederick II, the Great, of Prussia. After the Peace of Hubertsburg in 1763 between Austria, Prussia and Saxony, Prussia became a European great power. This gave the start to the rivalry between Prussia and Austria for the leadership of Germany.