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Austro-Hungarian Compromise of 1867

The 1850s witnessed several failures of Austrian external policy: the Crimean War, the dissolution of its alliance with Russia, and defeat in the Second Italian War of Independence. The setbacks continued in the 1860s with defeat in the Austro-Prussian War of 1866, which resulted in the Austro-Hungarian Compromise of 1867.

The Hungarian political leaders had two main goals during the negotiations. One was to regain the traditional status (both legal and political) of the Hungarian state, which was lost after the Hungarian Revolution of 1848. The other was to restore the series of reform laws of the revolutionary parliament of 1848, which were based on the 12 points that established modern civil and political rights, economic and societal reforms in Hungary.

The Compromise partially re-established the sovereignty of the Kingdom of Hungary, separate from, and no longer subject to the Austrian Empire. Instead, it was regarded as an equal partner with Austria. The compromise put an end to 18 years of absolutist rule and military dictatorship which had been introduced by Francis Joseph after the Hungarian Revolution of 1848. Franz Joseph was crowned King of Hungary on 8 June, and on 28 July he promulgated the laws that officially turned the Habsburg domains into the Dual Monarchy of Austria-Hungary.

According to Emperor Franz Joseph, "There were three of us who made the agreement: Deák, Andrássy and myself."

Political difficulties in Austria mounted continuously through the late 19th century and into the 20th century. However, Franz Joseph remained immensely respected; the emperor's patriarchal authority held the Empire together while the politicians squabbled among themselves.