How would an Austrian-ruled Germany differ from its OTL equivalent?

Compared to OTL Austro-Hungary, yes, proportionately more Germans. But compared to OTL Germany (which is the comparison raised by the OP), proportionately more non-Germans - a lot more.

Would it mean that? Plus, if it would mean more non-Gemrans they would be split among more groups.
 
Alright, then in this case, 19c Germany has a bunch of independent states with strong industrial sectors: Saxony, Brandenburg, probably more than one state in the Rhineland. This would encourage more balanced federalism, as opposed to Brandenburger ("Prussian") domination. There might still be a Kleindeutschland if those midsize powers wanted to avoid dealing with the Habsburgs, even... Or alternatively the Frankfurt Parliament, having no equivalent of Prussia to deal with and only Austria, would succeed, which again implies there might well still be a Kleindeutschland.

Or maybe some of the western states would prefer to become a part of the Netherlands?
 
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Or maybe some of the western states would prefer to become a part of the Netherlands?

I doubt it? There was a Dutch identity based on longstanding territorial borders and some cultural attributes. I can see places right on the border of the Netherlands, like East Frisia, joining in, but Bremen and Hamburg wouldn't, and from Cologne south, the Rhineland itself speaks High German.

For what it's worth, in my TL there's an unmentioned pan-Lotharingian identity in some of the liberal or national-liberal provinces near the Franco-German border: Alsace, the Rhineland, Frankfurt, Holland, Brabant, and to some extent Baden and the Palatinate. But there are no real demands for political secession (Frankfurt is the capital, and Alsace and the Netherlands got their federalism and language rights long ago), just international cooperation, same way there's cooperation between OTL's New York and Ontario on Niagara Falls infrastructure.

The issue here is that, if there's a stable liberal government rather than Austrian domination, there is no need for the Rhineland to be resentful. It's going to be rich and a net tax donor, yes. But OTL's New York is also a rich net tax donor, and yet pretty much nobody proposes secession (and if they do, it's of the city and not the state). Secession is the domain of areas that view themselves as distinct from the entire country in identity: Quebec, Catalonia, Scotland, Northern Italy, to some extent Bavaria. Regions that perceive themselves as a dominant or formerly dominant elite don't do that, which is why the Northeastern US never talks about secession and California only does in jokes.

If *Germany got over the hump of *Austrian domination in Grossdeutschland unification, that's how the *Rhineland would view itself: like New York or California, and not like Catalonia. The most that could happen is a unified Rhinelander identity demanding a state within Germany, the way some interwar German politicians, including Adenauer, wanted (North Rhine-)Westphalia to secede from Prussia and be a separate state within Germany.
 
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This is the patchwork of Habsburg territory in southern Germany before Napoleon:
Autriche_antérieure.png
 
For a late POD, what if Napoleon III decided "screw the Italians" and allied with Austria vs. Prussia? Prussia is defeated in detail, there is no German unification under Prussia, and Austria manages to corral the south German Catholic states into some sort of union. Later Prussia and the remaining northern states join under Austrian terms.

Bruce
 
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