In his foreign policy Joseph II. had been scarcely less unhappy. In 1784 he had resumed his plan of acquiring Bavaria for Austria by negotiating with the elector Charles Theodore its exchange for the Netherlands, which were to be erected for his benefit into a "Kingdom of Burgundy." The elector was not unwilling, but the scheme was wrecked by the opposition of the heir to the Bavarian throne, the duke of Zweibrücken, in response to whose appeal Frederick the Great formed, on the 23rd of July 1785, a confederation of German princes (Fürstenbund) for the purpose of opposing the threatened preponderance of Austria. Prussia was thus for the first time formally recognized as the protector of the German states against Austrian ambition, and had at the same time become the centre of an anti-Austrian alliance, which embraced Sweden, Poland and the maritime powers. In these circumstances the war with Turkey, on which Joseph embarked, in alliance with Russia, in 1788, would hardly have been justified by the most brilliant success.

The first campaign, however, which he conducted in person was a dismal failure; the Turks followed the Austrian army, disorganized by disease, across the Danube, and though the transference of the command to the veteran marshal Loudon somewhat retrieved the initial disasters, his successes were more than counterbalanced by the alliance, concluded on the 31st of January 1790, between Prussia and Turkey. Three weeks later, on the 20th of February 1790, Joseph died broken-hearted.

The situation needed all the statesmanship of the new ruler, Leopold II. Leopold II. This was less obvious in his domestic than in his foreign policy, though perhaps equally present. As grand-duke of Tuscany Leopold had won the reputation of an enlightened and liberal ruler; but meanwhile "Josephinism" had not been justified by its results, and the progress of the Revolution in France was beginning to scare even enlightened princes into reaction. Leopold, then, reverted to the traditional Habsburg methods; the old supremacy of the Church, regarded as the one effective bond of empire, was restored; and the Einheitsstaat was once more resolved into its elements, with the old machinery of diets and estates, and the old abuses. It was the beginning of that policy of "stability" associated later with Metternich, which was to last till the cataclysm of 1848. For the time, the policy was justified by its results. The spirit of revolutionary France had not yet touched the heart of the Habsburg empire, and national rivalries were expressed, not so much in expansive ambitions, as in a somnolent clinging to traditional privileges.

Leopold, therefore, who made his début on the European stage as the executor of the ban of the Empire against the insurgent Liégeois, was free to pose as the champion of order against the Revolution, without needing to fear the resentment of his subjects. He played this role with consummate skill in the negotiations that led up to the treaty of Reichenbach (August 15, 1790), which ended the quarrel with Prussia and paved the way to the armistice of Giurgevo with Turkey (September 10). Leopold was now free to deal with the Low Countries, which were reduced to order before the end of the year. On the 4th of August 1791, was signed at Sistova the definitive peace with Turkey, which practically established the status quo.

On the 6th of October 1700, Leopold had been crowned Roman Austria and the French Revolution. emperor at Frankfort, and it was as emperor, not as Habsburg, that he first found himself in direct antagonism to the France of the Revolution. The fact that Leopold's sister, Marie Antoinette, was the wife of Louis XVI. had done little to cement the Franco-Austrian alliance, which since 1763 had been practically non-existent; nor was it now the mainspring of his attitude towards revolutionary France. But by the decree of the 4th of August, which in the general abolition of feudal rights involved the possessions of many German princes enclavés in Alsace and Lorraine, the Constituent Assembly had made the first move in the war against the established European system. Leopold protested as sovereign of Germany; and the protest was soon enlarged into one made in the name of Europe. The circular letter of Count Kaunitz, dated the 6th of July 1791, calling on the sovereigns to unite against the Revolution, was at once the beginning of the Concert of Europe, and in a sense the last manifesto of the Holy Roman Empire as "the centre of political unity." But the common policy proclaimed in the famous declaration of Pillnitz (August 27), was soon wrecked upon the particular interests of the powers.

Both Austria and Prussia were much occupied with the Polish question, and to have plunged into a crusade against France would have been to have left Poland, where the new constitution had been proclaimed on the 3rd of May, to the mercy of Russia. Towards the further development of events in France, therefore, Leopold assumed at first a studiously moderate attitude; but his refusal to respond to the demand of the French government for the dispersal of the corps of émigrés assembled under the protection of the German princes on the frontier of France, and the insistence on the rights of princes dispossessed in Alsace and Lorraine, precipitated the crisis. On the 25th of January 1792 the French Assembly adopted the decree declaring that, in the event of no satisfactory reply having been received from the emperor by the 1st of March, war should be declared. On the 7th of February Austria and Prussia signed at Berlin an offensive and defensive treaty of alliance. Thus was ushered in the series of stupendous events which were to change the face of Europe and profoundly to affect the destinies of Austria. Leopold himself did not live to see the beginning of the struggle; he died on the 1st of March 1792, the day fixed by the Legislative Assembly as that on which the question of peace or war was to be decided.