The Compromise of 1867, also known as the Ausgleich, was an agreement that established the dual monarchy of Austria-Hungary, granting Hungary equal status with Austria in terms of governance. This arrangement was a significant response to rising nationalist sentiments within the empire, as various ethnic groups sought greater autonomy and recognition. By balancing the power between the Austrian and Hungarian regions, this compromise aimed to stabilize the political landscape and address diplomatic tensions arising from nationalist movements across Europe.