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The root causes of World War I extend well back into the nineteenth century. This answer will address the more immediate events, namely those in 1914. The event that sparked World War I was the assassination of Archduke Franz Ferdinand, heir to the Austro-Hungarian Empire, in Sarajevo. The guilty party was a terrorist, a young Bosnian Serb named Gavrilo Princip, who was a member of an ultra-nationalist group known as the Black Hand. In short, this group wanted Bosnia-Herzegovina to be part of a pan-Serbian state, and the Austrian Empire stood in the way. In any case, the event was significant because Austria, with the support of Germany, held Serbia accountable for the assassination. The Austria-Hungary issued a deliberately provocative ultimatum to Serbia, demanding that Serbian leaders associated with the Black Hand should be brought to justice, and that Austria-Hungary be allowed to send officials into the country to run the investigation into the assassination. Unwilling to accept all of these terms, the Serbs turned to Russia, who threatened war if Austria-Hungary invaded Serbia. France promised to support Russia, its ally. When the deadline for the ultimatum passed, Austrian forces attacked Serbia, and Russia mobilized its armies. Germany responded by declaring war on Russia on August 1, and Austria followed suit. The German high command, hoping to avoid a two-front war, invaded Belgium as part of their plan to attack France through the so-called "Schlieffen Plan." Great Britain joined the war in solidarity with Belgium, on August 4. By the end of the first week of August, almost every major power had entered the conflict. As historian Barbara Tuchman has observed, Otto von Bismarck was correct when he predicted that "some damned foolish thing in the Balkans" would drag the rest of Europe into war.
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