Okay, after a brief vacation, I've decided to start my first full fledged TL on this board. Here goes:
1859
Second Italian War of Independence
After almost declaring war on Piedmont-Sardinia, Franz Josef of Austria decides that it was best not to get on the bad side of Italian-sympathetic France and Britain. The Sardinians want an excuse to conquer more Italian territory, and attempt a daring military move in Austrian territory. However, things go awry, and on May 15th, Austria officially declares war on Sardinia for not respecting their territorial boundary.
France is unwilling to offer their help because their treaty with Sardinia didn't include the possibility of a Sardinian attack. The Austrian army in Northern Italy is much larger than the Sardinian force, and the first few engagements result in the destruction of almost half the Sardinian army and the deaths of several leading commanders. By mid-June, it was apparent that Sardinia was not going to win this war. Napoleon III entered the war on June 18th, after deciding that the Sardinians needed all the help they could get. The Austrians won two more victories by early July, when the bulk of the French army arrived. After several bloody battles in northwest Italy, Turin is captured by the Austrian army and the French and Sardinians are defeated. Sardinia is humiliated and buys its lost territories back for a large sum after Austria decides keeping that land would be too costly.
The war ends with a much more experienced Austrian army returing to Central Europe to fight Hungarian rebels. The money raked in from the spoils of war was used to train and arm new recruits into the Austrian Army as an internal war broke out.
1860-65
The Hungarian Revolution
During the war in Italy, Hungarian rebels rose up against their Austrian rulers in the hopes of either restablishing the Kingdom of Hungary or forming a confederation between Hungary and Austria. After the Austrian army returned victorious from Italy, the rebellion went downhill for the Hungarians. Not only was the Austrian army more experienced, but they also were rapidly building up their armed forces with the spoils of war from Italy. By 1863, Central Europe under Austria was a system of forts, military bases, and army camps. The revolt was ultimately crushed when the last major group of rebels was wiped out in Croatia in late 1865. In 1864, the Austrian army assisted Prussia in the Prusso-Danish War for Schleswig and Holstein. The war was a quick victory over the Danish, and resulted in heavy payments to Prussia and Austria.
Austro-Prussian War
In 1866, Prussia and Austria became at war due to a complex web of causes. Unlike OTL, the Italian states (they haven't united yet ITTL) didn't participate due to their major defeat just a few years before. Another advantage that the Austrians have ITTL is that they have been economically and militarily improving since 1859 and have had their army mobilized already. The war was fought on the open plains of central Germany, and resulted in a stalemate on most fronts. The war on the Austro-Prussian border bogged down to a trench war, with neither side making major movements or captures. By the end of the war later in 1866, both sides had divided OTL modern Germany just about evenly. The after effects of the war resulted in the Northern German Confederation being formed with OTL borders except that the border with Austria went about straight east to west from Belgium to Saxony (which was annexed by Austria). Austria formed the South German Confederation, made up by all the states and territories not claimed by Prussia's North German Confederation.
For the next few years Austro-Prussian relationships warm up and they enter an alliance. In 1868, Bismarck executes some clever diplomatic footwork that resulted in North and South Germany unifying. Venetia and Lombardy are sold to Sardinia in order to forge an alliance with them. Until the Franco-German war, the newly formed German Empire experienced an economic boom as ports on the Baltic, North Sea, and Aegean all brought in resources to the same empire. Railways are built from 1868 to 1870 connecting regions in former Austria and former Prussia. The Annexation of Luxembourg in 1870 triggered the Franco-German War, the newly formed Empire of Germany's first war.
Franco-German War
In 1870, Germany annexed the city of Luxembourg, which triggered Napoleon III of France to declare war on the recently formed country. The war went much as it did in OTL, except it ended several months earlier than in OTL. After the siege of Paris, the French surrender in November 1870. The war results in Alsace-Lorraine being ceded to Germany.
After a period of prosperity, Europe began experiencing an economic depression. In order to combat this, the Germans begin a series of projects such as the expansion of ports on the Aegean, the construction of several new warships (to combat unemployment) and increased trading with Italy (united during the Franco-German War), Turkey, and several territories in the Balkans. The trading with Turkey resulted in a German-Turkish alliance, signed in 1875.
German-Russian War
The German-Turkish Alliance threatened the other Great Powers of Europe, such as France, Britain, and Russia. France and Britain both had overseas trading in the eastern Mediterranean, but they bribed the Germans and Ottomans not to interfere. Russia began supplying pro-independence rebels in the Turkish Balkans and Hungarian rebels in Germany with weapons and volunteers. In 1877, Germany and Turkey declared war on Russia. Romania joined Russia as an ally, but didn't intend to actually fight. In June, 1877, Germany invaded Romania and conquered the region. In the south, Turkish soldiers (with heavy German assistance) fought the rebels. By late 1878, the Germans had conquered all of OTL Poland, Ukraine west of the Dnieper, and the Baltic states. Germany once again excercised its military power. Several naval battles also took place in the Black Sea, resulting in the German fleet taking port in the captured ports of Romania and Ukraine.
Bismarck arranged a close trading partnership with Turkey. In 1880, Germany bought Libya and Tunisia from Turkey for a high price. The German Navy in the Mediterranean swells in size soon after the purchase of Tunisia and Libya. German North Africa is formed in 1881, much to the protest of the British in Egypt to the East and the French in the west. However, the French fear another devastating war with their more powerful neighbor, so make no demands. In the Pacific, German New Guinea was founded in 1882 (the colony consists of the entire eastern half). The German colonial empire grew even more as the Phillipines were bought from Spain (the Spanish decided that the colony wasn't worth it due to rebellion) and Portuguese Timor in 1885 and 1888, respectively. Heavy German trading in Hawaii took place, but American influenc in the islands prohibited the Germans from turning it into a colony.
Heavy involvement in Africa by the Germans caused the Herero people and several other tribes in other colonies to rebel. This was reacted to in a quick manner. The Herero were starved, poisoned, attacked, and forced to work in factories along the Namibian coast near Windhoek. Other tribes were dealt with in a similar way. By the 1890s, most of the German colonies had been quelled, due to the efficiency of the genocidal tactics and sheer fear of the Germans. Germany had also forged a tight alliance with Turkey and a loose one with Spain, Portugal, and Italy. The turn of the century seemed to promise yet more expansion for the German Empire.