Hitler wanted all German-speaking nations in Europe to be a part of Germany. To this end, he had designs on re-uniting Germany with his native homeland, Austria. Under the terms of the Treaty of Versailles, however, Germany and Austria were forbidden to be unified.
Hitler also wanted control of the largely German-speaking area within Czechoslovakia, called the Sudetenland. Importantly, Austria shared a border with this area.
In an attempt to realise his goals, Hitler was determined to destabilise Austria and undermine its independence. His ultimate goal was Anschluss (union) with Austria.
The Austrian Chancellor, Dollfuss, tried to crack down on the Socialists and Nazis - political factions that he thought were tearing the country apart. Dollfuss banned the Nazi party.
In 1934, Hitler ordered the Austrian Nazis to create havoc in Austria. This turned into an attempt to overthrow the government. Chancellor Dollfuss was murdered but the attempted coup failed because the Austrian military intervened to back up the government.
Italy had an agreement with Austria that it would protect Austria from outside aggression. The Italian dictator, Mussolini, honoured the agreement and moved Italian troops to the Austrian border to deter Hitler from invading.
The new Austrian Chancellor, Schuschnigg tried to preserve the country from German invasion by trying not to give Hitler an excuse for aggression. He tried to co-operate with Hitler as much as possible.
Schuschnigg signed the German-Austrian Agreement of 1936. This pact recognised the independence of Austria but the price was that Austria's foreign policy had to be consistent with Germany's. The agreement also allowed Nazis to hold official posts in Austria. Schuschnigg hoped this would appease Hitler. He was wrong.
Schuschnigg's position was undermined in 1936 when Hitler and Mussolini formalised the Rome-Berlin Axis during their joint involvement in the Spanish Civil War (1936-39). With Germany and Italy now firm allies, Austria had lost the protection of Italy and was vulnerable to German attack.
In 1938, Schuschnigg visited Hitler at his summer retreat at Berchtesgaden, near the Austrian border. Hitler demanded that Nazis be given key government posts in Austria. Schuschnigg compromised and the Nazi member, Seyss-Inquart, was made Minister of the Interior.
Hitler ordered Austrian Nazis to create as much trouble and destruction as possible in order to put pressure on Schuschnigg. If Hitler could claim that Austrian law and order had broken down he could justify marching German troops into Vienna to restore peace - despite the fact that he was responsible for the chaos in the first place.