Because of wartime conditions there was no coronation in Vienna but a coronation in Hungary was required as Charles took very seriously his oath to God as Apostolic King of Hungary when the Crown of St Stephen was placed on his head. He very much viewed monarchy as a sacred trust, a duty to God to care for his people, protect them and champion their cause. By this time, however, the war was going very badly for Austria-Hungary and ethnic nationalists were threatening to tear the Hapsburg empire apart. Emperor Charles reshuffled the military high command and began drawing up plans for greater autonomy for the ethnic regions of the empire. This had been talked about before under such names as the ‘United States of Greater Austria’ or a conversion from the “dualism” of Austria-Hungary to a system of “trialism” in which the Slavic peoples would be given co-equal status with the German-Austrians and Magyar-Hungarians. However, nothing much could be accomplished so long as the war was raging and in which Austria-Hungary was rapidly becoming completely exhausted and ever more dependent on German assistance for their survival.
Unfortunately, things did not go well. The Allies demanded concessions from Germany and Turkey that the Emperor of Austria-Hungary certainly had no power to deliver. Furthermore, the French and British had made any peace with the Hapsburgs rather impossible through the secret treaties they had already made with the Italians, Serbs and others wherein they had promised vast tracts of Hapsburg territory to these various peoples in return for supporting the Allied side. The effort at peace came to nothing and to make matters worse news of the peace proposal leaked out. Naturally the Germans were furious and when Emperor Charles denied the Allied claims French Prime Minister Georges Clemenceau made the Sixtus letters public. This doomed any effort by the Austro-Hungarians to achieve a separate peace and effectively made them hostages of Germany for the duration of the conflict, the Germans even drawing up a contingency plan for the invasion of Austria. As the war drew to a close the ethnic nationalists, who had long been supported by the Allies, took a greater hold, encouraged by the call for ethnic self-determination on the part of U.S. President Woodrow Wilson.
As a man who saw kingship as a sacred duty, Charles refused to abdicate and instead relinquished “participation” in the Austrian government in recognition of the fact that the country was no longer under his control in any event. He felt he had no right to give away a duty God had imposed on him alone. In 1919 the Emperor and his family went into exile in Switzerland with Charles still asserting his sovereignty and stressing that the actions of the government in power had no validity in the eyes of the House of Hapsburg. The goal of restoration was never far from his thoughts and although the prospects in Austria were slim at that time, conditions in Hungary seemed more favorable, factions were struggling for power and royalists were a force to be reckoned with. In name at least the monarchy was maintained with the former admiral Miklos Horthy assuming the position of regent and suppressing a communist revolution. Admiral Horthy claimed to be holding power in the absence of the King (Charles) only until the time was right for their monarch to return to them. However, twice in 1921 Emperor Charles attempted to restore himself in Hungary, with considerable support, and yet on each occasion Horthy refused to step down and took measures to defend his position. Not wanting to be the cause of a civil war Charles returned to his exile.