Austro-Italian ironclad arms race
In the years after Ferdinand Max's departure from Austria, the Imperial Austrian Navy suffered under further political and budgetary constraints. In April 1864, it was proposed that the naval ministry, which the former Archduke had helped to establish, be disbanded. In January 1865, Emperor Franz Joseph I dissolved the ministry and the Imperial Austrian Navy was again placed under the jurisdiction of the Austrian Ministry of War. Under the 1865 budget, just 7,100,000 Florins were allocated towards naval expenses, but once more, none of the funds were designated for warship construction. In 1866, the naval budget grew slightly to 7,800,000 Florins, but for the third consecutive year there would be no funds for additional ironclads, or other warships. Thus, when the Seven Weeks War began in June 1866, the Imperial Austrian Navy would possess only ships which had been constructed during Ferdinand Max's tenure as "Oberkommandant der Marine".
War of the Bavarian Succession
By the late 1770s, Joseph also faced important diplomatic obstacles in consolidating Habsburg influence in Central Europe. When the British had been Austria's allies, Austria could count on British support in its wars, but Britain was now allied with Prussia. In the Diplomatic Revolution, the French replaced the British as Austria's ally, but they were fickle, as Joseph discovered when Vergennes extricated Versailles from its obligations. Russia, which also had been an important Austrian ally for most of the Seven Years' War, sought opportunities for expansion at the expense of its weak neighbors. In 1778, that meant Poland and the Ottoman Empire, but Joseph fully understood the danger of appearing weak in Russia's eyes: Habsburg lands could be carved off easily by the cagey Catherine's diplomatic knife. Still, Frederick of Prussia was the most definite enemy, as he had been throughout the reigns of Theresa and Franz before him, when the Prussian state's emergence as a player on the European stage had occurred at Habsburg expense, first with the loss of Silesia, and later in the 1750s and 1760s. Joseph sought to unify the different portions of his realm, not the German states as a whole, and to establish Habsburg hegemony in German-speaking central Europe beginning with the partition of Bavaria.