Despite the reactionary Habsburg regime under Emperor Franz Joseph, forces within the government and leading intelligentsia proposed various reforms to solve the issue of ethnic discrimination across the Austro-Hungarian Empire, attempting to resolve the tensions that the Ausgleich of 1867 had further aggravated by the inclusion of Hungarians as a privileged class to the detriment of the remaining minorities. This paper will look at the Austro-Marxist and Federalist reformers and the ways in which their concepts, if implemented, could have saved the Empire from its downfall in 1918. Ultimately, neither the Austro-Marxist concept of a centralized system of universal rights across the borders of all nations within the existing empire nor the Federalist idea of a national territorial sovereignty allowing for a certain degree of individual autonomy managed to be adopted by the Allied victors of World War I. The myopic focus of the ‘Big Four’ on the German Empire blinded them to the intricate economic and political balance needed for peace in the Balkans. While France, Britain, and Italy exhibited a general lack of concern to the outcome in the Balkans, Wilson’s ‘self-determination’ doctrine is most responsible for creating the unsustainable, irredentist-driven states that the reform-minded intellectuals—Austro-Marxist or Federalist—most had sought to avoid. In addition to a discussion of the reform movements in the Austro-Hungarian Empire, this paper will explore the reforms’ strong similarities to the present struggles within the European Union, particularly the divide between Euro-federalists and Euro-sceptics. The crisis situation and reform efforts of the Austrian Empire from 1867 to 1914 reveal significant policy lessons applicable to the European Union as it navigates the current crossroads between further federal integration or a return to medieval disintegration.