the Battle of Lissa in 1866, Italy's Regia Marina was considered the most-important naval power in the region which Austria-Hungary measured itself against, often unfavorably. The disparity between the Austro-Hungarian and Italian navies had existed since the unification of Italy; in the late 1880s Italy had the third-largest fleet in the world, behind the French Republic's Navy and the British Royal Navy. While the disparity between Italian and Austro-Hungarian naval strength had been somewhat equalized with the Russian Imperial Navy and the German Kaiserliche Marine surpassing the Italian Navy in 1893 and in 1894, Italy had once again regained the initiative by the turn of the century. In 1903, the year before Montecuccoli's appointment, Italy had 18 battleships in commission or under construction compared to 6 Austro-Hungarian battleships. Following the construction of the final two s in 1903, the Italian Navy elected to construct a series of large cruisers rather than additional battleships. Furthermore, a major scandal involving the Terni steel works' armor contracts led to a government investigation that postponed several naval construction programs for three years. These delays meant that the Italian Navy would not initiate construction on another battleship until 1909, and provided the Austro-Hungarian Navy an attempt to even the disparity between the two fleets. The construction of Prinz Eugen and the Tegetthoff class as a whole can thus be viewed in the context of the naval rivalry between Austria-Hungary and Italy, with the ship playing a role in a larger attempt by Austria-Hungary to compete with Italy's naval power. Austro-Italian naval arms race The revolution in naval technology created by the launch of the British in 1906 and the Anglo-German naval arms race that followed had a tremendous impact on the development of future battleships around the world, including Prinz Eugen. Dreadnought, armed with ten large-caliber guns, was the first of a revolutionary new standard of "all-big-gun" battleships that rendered pre-dreadnought battleships obsolete. As a result, the value of older battleships declined rapidly in the years after 1906. This development gave Austria-Hungary the opportunity to make up for neglecting its navy in past years. Furthermore, Austria-Hungary's improved financial situation following the Austro-Hungarian Compromise of 1867 were beginning to reflect in the form of larger budgets being allocated to the Empire's armed forces. Political will also existed to construct Austria-Hungary's own dreadnought battleship, as both Archduke Ferdinand and Admiral Montecuccoli were supportive of constructing a new