Austria’s complete defeat in the Austro-Prussian War…

Austria’s complete defeat in the Austro-Prussian War has ended forever its position as the leading state of Germany, as the remaining German minor states are soon absorbed into the German Empire created by Prussia.

Austria has also lost almost all of her remaining claims and influence in Italy, which had been her chief foreign policy interest.

The state needs to redefine itself to maintain unity in the face of nationalism.

Emperor Franz Joseph had dismissed his centralist ministry in July 1865; a new Diet is convoked in December and the negotiations with Hungary, interrupted by the outbreak of the Seven Weeks' War, resume, with both parties further convinced of the necessity of agreement.