The "nationality problem"—the empire's inability to reconcile its 11+ major ethnic groups' aspirations—was a structural cause of World War I.
Austria-Hungary (1867–1918) was a dual monarchy ruled by a German-Magyar elite over Slavs (Czechs, Slovaks, Poles, Ruthenians, Slovenes, Croats, Serbs), Romanians, and Italians. The 1867 Compromise satisfied Hungarians but excluded others, fueling demands for autonomy or independence.
Annexation of Bosnia-Herzegovina (formally Ottoman, administered by Austria since 1878) outraged Serbia and South Slavs, who saw it as blocking a future South Slav state. Russia backed down after German ultimatum—humiliation that made Russia less likely to yield next time.
Gavrilo Princip, a Bosnian Serb nationalist (Young Bosnia, backed by Serbian intelligence/Black Hand), killed the heir in Sarajevo. The empire's response—ultimatum to Serbia—triggered the alliance cascade: Russia → Germany → France → Britain.
The nationality problem didn't cause WWI alone, but it provided the spark (Sarajevo), the tinder (Balkan instability), and the structural fragility that turned a crisis into a world war.