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.
Diplomatic Revolution
Maria Theresa's diplomats, after securing French neutrality, actively began to establish an anti-Prussian coalition. Austria's actions alerted Frederick II, who decided to strike first by invading Saxony, commencing the Seven Years' War (1756–1763). Frederick's actions were meant to scare Russia out of supporting Austria (the two countries had previously entered into a defensive alliance in 1746). However, by invading Saxony, Frederick had inflamed his enemies; Russia, under the direction of Empress Elizabeth, sent an additional 80,000 troops to Austria. One year after the signing of the First Treaty of Versailles, France and Austria signed a new offensive alliance, the Second Treaty of Versailles, on 1 May 1757.