Considering the many difficult problems of political, financial and economic nature which the possession of colonies created for the various colonial powers of Europe, Austria might have considered itself fortunate because of its entire lack of colonies. However, the problem of Balkan readjustments, upon which we have touched just now, took the place of colonial problems and brought to Austria as many difficulties and entanglements as any colony has ever brought to its possessor. It was along that line that Austria-Hungary was brought into contact with the other nations of Europe. Of these Russia was the one most vitally interested in the same questions as Austria. For of almost every race that inhabited Austria additional numbers were living in Russia and whatever one country did or attempted to do in the Near East was looked upon with suspicion by the other. Turkey, too, of course, was vitally interested and affected by Austria's policy in the Near East and so was England ever since its foreign policy had been committed to the principle of keeping the Near Eastern _status quo_ undisturbed. Outside of these possibilities of becoming involved with another nation the Dual Monarchy had long-standing difficulties with Italy. For, previous to the creation of the present kingdom of Italy, Austria had possessed large parts of northern Italy, and the loss of these fertile and rich territories was a severe blow to Austria. The enmity between the two countries was still more enhanced when, in 1866, Austria had to give up Venetia to Italy. This loss was an indirect result of the Prusso-Austrian War of 1866, the details of which we have already mentioned in the recital of the political development of Germany. Previous to declaring war against Austria, Prussia had formed an alliance with Italy and at the beginning of hostilities between Prussia and Austria Italy, too, attacked Austria. Although the Austrian troops defeated the Italians, Austria was forced, when peace was concluded, to yield Venetia to Italy retaining only a small part of its former possessions on the Adriatic so as not to be cut off entirely from a maritime outlet. This small remnant of its former Italian possessions, however, proved to be a thorn in the body politic of the Dual Monarchy. The inhabitants of this province were preponderately Italian in language and Italian in feeling and ever since the formation of the kingdom of Italy a strong propaganda was carried on with the object of finally accomplishing the redemption of these provinces from Austrian rule and their unification with Italy.