Stronger Habsburg Empire after 1866

Valdemar II

Banned
How can we get a stronger Austria after 1866, without them having won the Prussian-Austrian War. What policies would they need to take, what military reforms would they need. I don't care about the POD but Austria still need to lose to Prussia in 1866 and the German Empire need to established with OTL border under Prussian dominance. This isn't meant to give Austria a giant empire or vast new territories, but to ask what could they do inside their territorium in OTL to strengthen the state.
 
IMO, I think the Austrians need to avoid Dualism. The problem is, losing the 1866 war pretty much assures it will occur. After influence in Italy and conceding their position to Prussia had rendered Franz Josef's government weak and caused them to most away from the Neo-Absolutism and centralizing policies of the 1850s. However, conceding to the Magyars significant autonomy renders the Austrian government impotent: the Magyars frustrated the Austrian government throughout the 19th and 20th century and pretty much sought to increase their autonomy whenever they got the chance. IIRC, military spending in Austria-Hungary actually decreased throughout the 20th century while the other great powers increased their military spending, and the Hungarians also frustrated certain military reforms. I think Austria needs to maintain a rather centralized government to be functional, yet it's multiethnic character is bound to cause issues.
 
IMO, I think the Austrians need to avoid Dualism. The problem is, losing the 1866 war pretty much assures it will occur. After influence in Italy and conceding their position to Prussia had rendered Franz Josef's government weak and caused them to most away from the Neo-Absolutism and centralizing policies of the 1850s. However, conceding to the Magyars significant autonomy renders the Austrian government impotent: the Magyars frustrated the Austrian government throughout the 19th and 20th century and pretty much sought to increase their autonomy whenever they got the chance.

That might be a way to strengthen the Empire - but only on the short-term. The main result lateron would be to add Hungarians to the discontent minorities and therefore maing the basic problems of Austria worse, i'd say.

What about loosing even more decisive to a point that civil unrest starts and foreign powers step in to preserve Austria? Neither Britain nor France should have an interest in Austria falling. An end of German dualism ensures Prussian hegemony in central Europe, and an end of Austrian Balkan power ensures Russian hegemony there. If the Austrians were more pro-Russian during the Crimean war and after that, even Russia might support keeping Austria. With this foreign support and civil unrest in the interior, the Austrians are forced to thouroughly reform early, leading to federalism at a time when independence was not as much an option it became later. If they do it well, Austria might be a stable, more democratic federalist country even before teh 20th century begins. That should guarantee a higher probability of survival than a highly centralized late-absolutist state.
 

Valdemar II

Banned
I agree that the dualism was a giant problem, it forced the Austrians to prop up a reactionary and oppressive Hungarian regime, but I'm not sure that federalism are a good idea either, at least not one based on ethnic borders, that would risk giving them the same problem as Belgium has today making the central government weak and split by ethnic and regional interests. There are also the problem that ethnic borders in AH was quite fluid. I think they are better off pushing the Cisleithania Kronland structure down over Transleithania. Such federal structure would force the different ethnic groups to work through the federal structures rather than seek independence from them. A more representive government in Hungary would also help modernise it, while it will never be able to compete with the industrial heartland in Bohemia, it could help them building up light industry and a middelclass. While it would likely lower agricultural production, I think the two former results would make up for it.
 
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