In 1936, the German boycott caused too much damage to Austria. [Clarification needed] This summer, Schuschnigg Mussolini said his country had to agree with Germany. On 11 July 1936, he signed an agreement with the German ambassador Franz von Papen in which Schuschnigg accepted the release of the Nazis imprisoned in Austria and promised Germany to respect Austrian sovereignty.  In accordance with the provisions of the Austro-German Treaty, Austria declared itself “a German state” that would always follow the German example in foreign policy, and members of the “national opposition” were allowed to enter the cabinet, for which the Austrian Nazis promised to stop their terrorist attacks on the government. This did not satisfy Hitler and the pro-German Austrian Nazis were getting stronger and stronger. Such a decision does not affect the Rome Protocols of 1934 and their additions of 1936, nor Austria`s relations with Italy and Hungary as partners in these protocols. Considering that the détente desired by both sides can only become a reality if the governments of both countries fulfil certain preconditions, the Austrian Federal Government and the Federal Government will take a number of special measures to convene the necessary boards of directors. In 1934, Italy had concluded an agreement with Austria that would protect Austria from external aggression. Italian dictator Mussolini stuck to the deal and undone Italian troops to the Austrian border to prevent Hitler from invading. A great interest in the Austro-German Pact because of its likely impact on Italian-German relations. Italy is the declared protector of Austrian independence. This paves the way for an Italian-German agreement.
Thus, Germany, Austria and Italy would be brought together to form a new and huge European bloc. Schuschnigg`s position was undermined in 1936 when Hitler and Mussolini formed the Rome-Berlin axis during their joint participation in the Spanish Civil War (1936-39). Now that Germany and Italy were strong allies, Austria had lost Italy`s protection and was vulnerable to German attacks. After the rise of violence and Hitler`s demands for Austria to accept a Union, Schuschnigg met Hitler on February 12, 1938 in Berchtesgaden to avoid the recapture of Austria. Hitler made a number of demands of Schuschnigg, including the appointment of Nazi sympathizers to positions of power in the government. The key command was that of Arthur Seyss-Inquart as Minister of Public Security, with unlimited police control. In exchange, Hitler publicly reaffirmed the treaty of July 11, 1936 and reaffirmed his support for Austria`s national sovereignty. Defeated and threatened by Hitler, Schuschnigg accepted these demands and put them into practice.  Schuschnigg signed the German-Austrian Agreement of 1936.
This pact recognized Austria`s independence, but the price to pay was that Austria`s foreign policy had to match Germany. The agreement also allowed the Nazis to hold official positions in Austria. Schuschnigg hoped this would appease Hitler.