The Austro-Hungarian Compromise of 1867 established the dual monarchy of Austria and Hungary. This agreement created two separate governments, each with its own parliament, while sharing a common monarch, Franz Joseph I. The compromise aimed to address the nationalistic aspirations of the Hungarian people and stabilize the empire. Under this arrangement, both regions maintained control over their internal affairs, but they collaborated on foreign policy and military matters. The Austro-Hungarian Empire became a significant political entity in Europe, balancing the interests of various ethnic groups while facing ongoing tensions and challenges within its diverse population.