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The Austro-Hungarian Empire had full awareness of the relatively small size of their navy (k.u.k. Kriegsmarine) compared to its immediate neighbours and rivals, Italy and France. Submarines were a way for Austria-Hungary to try and level the playing field, kind of like torpedo boats. Cheaper to build and maintain them then capital ships but can cause similar kind of damage to an enemy navy. But as always, their leaders didn't realize the power of underwater warfare on time.

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