Serbia has lost over half of its male population by this point. Close to 60% of its troops have died. They are completaly occupied by the Central powers. They are in no possition to demand anything, and will be rebuilding for decades after the war, so they will not be in any possition to pick fights with Austria.
Italy meanwhile, evem though they won some victories, have completely failed in their goals of breaking through into Slovenia and were stuck in the meatgrinder that was Isonzo. With a peace that would give Italy Trentino and Gorizza, Austria would keep its well defensible borders and a future Italien incursion would most likely not be much more sucessfull.
As for Germany, I adressed that already. And after the war, Germany is going to get its millitary restrictions and not be a threat for at least a decade or two.
As for Ukraine and Poland, here Austria could actually benefit from their existence. They both would need protection from Russia (or USSR depends on what happens there) and Austria could provide it quite well. There is of course the question of Galicia, but even in OTL, there were plans for giving Galicia away in exchange for Habsburg monarchs in the countries. While this did not happen as Austria collapsed, in this timeline? Well both the candidate archdukes could speak the local languages and considering both states would be geting a large amount of land, and aid against Russia/USSR they desperatly need, I wouldn't be suprised if both accepted. So, Austria could quite easily gain teo good allies in the east, while getting rid off a problematic part of its territory.
As for the internal situation, it would be pretty good. The new emperor has just ended a brutal and unpopular war, not a surrender but a rather honorable peace, only giving up a few mountains in Italy. The damned Serbians were sufficiently punished (the Archdukes assasins are dead and Serbia is no longer a large problem), and there is frankly no reason to keep that damned land.
Karl would then actually get a chance to deal with internal problems one by one. If the German nationalists do try to rise up, it would unite the other nationalities and even much of the German population against tem (we finally stoped fighting, have peace and full food again, and you want to fight?!), especially as Croatian and Czech regiments can be quickly called in from Italy.
The Croatians, considering that independance would leave them open to an Italian attack, and that they were likely to recieve equal status to Austria would likely stay put. The Czechs have remained mostly loyal and with the possible threat of German nationalists looming over them, would be one of the main supporters of the empire. I already adressed Galicia, so lets move to the Kossúth in the room, Hungary.
I have noticed an interesting trend of "A second, but this time sucessfull, Hungarien revolt", in many timelines that I read. I frankly find it highly questionable and improbable. By 1917 the Hungarien government controlled by the land owning magnates, have managed to anger just about everyone who wasn't them. Their minorities (Romanians, Slovakians, Germans and many others) hated them for the Magyarization policy. The common peopl, by their refusal to actually let them vote (which was restricted to around 1/10 of "Hungarians"), or the fact that 90% of all land was concentrated in the magnates hands, and they refused any reforms (there are other reasons but that would get even more long). In fact, in OTL, some of the magnates were murdered right after independence. The progressives under count Karolyi took power, but failed to reform and got removed by a Communist coup few months later. So lets imagine a scenario, where Karl officially announces his plans to federalize the empire, while also hinting that he is supportive of reforms in Hungary, and the Hungarian magnates declare a revolt. Half of their army that is made out of minorities disintegrates almost immediatly, with the rest that is made out of Hungarien lower classes is likely to do the same. Meanwhile, Budapest itself likely gets some protests and leftist uprisings, with much of Hungary getting taken over by minorities, with the support of the Habsburg army. By the time the Austrian forces get to Budapest, the remaining magnates are more likely to come beging for forgiveness and aid against the red uprisings, then to fight the Imperial army.
So yeah. The outside enemies are either too bussy, not that big of a threat, or can be gained as allies. The internal situation can be handled in several years, likely with one of the Federal plans that were present pre-war. The situation will get fairly interesting by the 1930's, when Germany and Italy will be rebuild, and likely under revanchist governmants. The Romanians and perhaps Serbians will also be planning for another round, though this time perhaps in alliance with Germany. The Danubian Federation/Empire/USGA/whatever, will be against them, perhaps with allied states in the East (which would probably also mean antagonistic Russia/USSR). Fairly interesting scenario.
So yeah, this got slightly longer then I expected
. The one part I am uncertain of is the fate of Galicia. If the alliance and exchange with Poland and Ukraine does not happen, the territory is likely integrated into the new federation, though there would likely be nationalist problems there. On the other hand, Russia/USSR will likely be less antagonistic (though this is admitadly highly dependant on exact situation of it), while neither the Polish, nor Ukrainins will be capable of pressing their claims, considering the Eastern threat.
