Ausgleich, österreichischungarischer

Ausgleich, österreichischungarischer, an agreement made in 1867 radically revising the relationship between Austria and Hungary. It was made necessary by the defeat of Austria in the German War of 1866 (see Deutscher Krieg), which excluded Austria from Germany and encouraged Hungarian particularism. The Ausgleich established a dual state, the two components of which dealt independently with their internal affairs, while foreign policy, military matters, and the related finances were dealt with by joint ministries. The Ausgleich constituted the state Österreich-Ungarn. The arrangement functioned adequately for a time, but from 1897 on there was constant friction over the financial terms, which had to be renegotiated every ten years.