ABSTRACT
The moving principles of the Habsburg Monarchy’s political and economic pivot to the neighboring Balkans in the second half of the nineteenth century were pragmatic. Defeated by Prussia and Italy in 1866, the Habsburgs lost their Italian territories. Then came German unification in 1871 under Prussian leadership, excluding Austria. The loss of Lombardy and Venetia to Italy, the unification of Germany, pressure by neighboring imperial Russia to the north and east, and the lack of colonies combined to leave Southeastern Europe as the only possible direction for expanding Vienna’s influence and control. The Empire’s approach to the region was also facilitated by its domestic reconfiguration, which for some time eased internal tensions: in 1867, Emperor Franz Joseph I reached a compromise (Ausgleich) with the Hungarian political elites in order to transform the Empire into a dualistic state functioning as a real-political and customs union. The two constitutive parts of the Monarchy, Austria (Cisleithania) and Hungary (Transleithania), which included Croatia-Slavonia, were unified in foreign relations under the name Austria-Hungary. In internal affairs, they had autonomy except for the common finance and war ministries. As will be seen, the conflict of interests between Austria and Hungary, despite their unified foreign policy, impacted also the Balkan policies of the Dual Monarchy.
