Austria's defeat in the Seven Weeks' War…

Austria's defeat in the Seven Weeks' War demonstrates that she is no longer a great power.

Franz Joseph, looking to the future, sets three foreign policy objectives designed to restore Austrian leadership in Germany: regain great-power status; counter Prussian moves in southern Germany; and avoid going to war for the foreseeable future.

Because reconciliation with Hungary is a precondition for regaining great-power status, the new foreign minister, Friedrich Ferdinand von Beust, becomes a strong advocate of bringing the stalemated negotiations with the Hungarians to a successful conclusion.

By the spring of 1867, a compromise has been reached and is enacted into law by the Hungarian Diet.