Ever since the conclusion of World War I, Germany had been longing for a union with Austria. In 1931 Germany made a bid to form a customs union with Austria but the attempt was foiled due to intervention of the western powers. However, Hitler on assumption of power, made it one of the basic principles of his foreign policy to complete Anschluss (Union with Austria).
He openly encouraged the subversive elements in Austria to bring about the fall of Austrian Chancellor Dollfus, who was opposed to Anschluss. On 25 July 1934, the terrorists killed Dollfus. Italy under Mussolini immediately came to the rescue of the Austrian Government.
As a result Hitler could not intervene in the Austrian affairs. However, he succeeded in concluding an agreement with Austria in 1936. Under this agreement Germany agreed to respect the independence of Austria. Trade and travel between the two countries was also opened. However, ultimate objective of Hitler was annexation of Austria.
But he realized that he could not be successful in his mission unless he had allies to support Germany. Hitler was convinced that France and Soviet Union could not befriended while Great Britain, though quite conciliatory, could not be relied upon.
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Therefore, he naturally looked towards Italy. On the other hand, Italy was also looking for some ally because after her thrust into Ethiopia in 1934-36, a serious wedge had been created between Italy on the one hand and France, Great Britain and Russia on the other. Mussolini saw in German friendship as the only way out.
Close relations between Germany and Italy also became possible because both of them were determined to undo the Peace Settlement of 1939. Hitler tried to win over Italy by extending support to Mussolini during the Spanish Civil War. In 1936 the two countries concluded an agreement for mutual co-operation.
As a result in 1938 when Germany annexed Austria all the western powers remained mere spectators and did nothing to check Germany. As one writer has observed, like sincere widows they moaned and shouted but otherwise did nothing.
In 1936 Nazi Germany entered into an Anti-Comintern Pact with Japan. Under the agreement the two countries agreed to consult each other with regard to the measures to be taken to combat the activities of the Communists. In November 1937 even Italy joined the anti-Comintern pact and thus the Britain-Rome-Tokyo Axis was created.