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.
Military history of Germany
During the Seven Years' War, Prussia fought on the side of Britain against Russia, Sweden, Austria, France, and Saxony. Frederick II of Prussia first invaded Saxony and defeated a Saxon army at Lobositz. Frederick would then invade Bohemia, the Prussians besieged Prague, but they were defeated at Kolin. Since Prussia looked vulnerable, the Austrians and French invaded Prussian lands. However, the French were defeated at Rossbach and the Austrians at Leuthen. In 1758, Frederick the Great tried to invade Austria, but he failed. Now, the Russians tried to defeat the Prussians, but the Prussians earned a pyrrhic victory at the Zorndorf. The Swedes, however, fought the Prussians to a draw at Tornow. However, Austria gained a victory against the Prussian main army at Hochkirch. In 1759, the Prussians lost at Kunersdorf to the combined Russians and Austrians. Berlin itself was taken for a few days in 1762, but its army could not be destroyed. However, the great alliance against Prussia broke up when Elizabeth of Russia died. It was from her death that a pro-Prussian ruler, Peter III would sue for peace. It was thanks to this "miracle of the House of Brandenburg" and to the unshakable will of Frederick that Prussia survived.