The situation within Austria-Hungary is increasingly desperate. The dislocation of war, Allied blockade and the breakdown of trust between the different parts of the Empire are leading to food shortages. The urban poor of Vienna are going so hungry that men are volunteering for the army in order to be fed.
Emperor Karl fears that if the war continues it will mean the end of his empire. But Austria-Hungary is too tied to Germany for him to simply defect from the alliance and sue for peace. Instead, through aristocratic contacts, he puts forth secret peace feelers to the French, so secret that even Ottokar Czernin, the current foreign minister, is kept in the dark about them. The British and French are interested by Karl’s desire for peace but Germany is their main enemy and they fear that pursuing negotiations in earnest with Austria-Hungary would be a waste of time. They also suspect that it will be impossible to agree a settlement with Austria-Hungary that will satisfy the demands of the Italians.
Karl is also trying to reform the military and civil structures governing the empire. Today he makes a key move in this regard, removing Conrad from his role as army chief of staff. Conrad was one of the main cheerleaders for war back in 1914 but the performance of the army since then has been disastrous. It is perhaps surprising that Conrad has held onto his job for so long, but perhaps it needed a new emperor to realise that he was a liability rather than an asset.
After being relieved of his post, Conrad is not forced into retirement but appointed to command one of the armies fighting on the Italian front. His replacement as army chief of staff is Arthur Arz von Straussenburg. Arz is a less political general than his predecessor. He is content to defer to Karl on matters of grand strategy.
Emperor Karl of Austria-Hungary (Wikipedia)