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From the beginning he had many problems under Austrian rule. Hungarian nobility, Catholic [[clergy]], and German officers were all hostile toward Serbs, but the wise patriarch saved his people from Catholic [[proselytism]]. He managed to negotiate with bishops who the signed Union. After this, those bishops reembraced Orthodoxy. Yet he failed in trying to reestablish an Orthodox bishopric in Transylvania (Metropolitan of Transylvania signed the Union in 1699.). He established relations with Russian court. He also started to negotiate with the Turks in order to return to Peć. His greatest enemy was Cardinal Leopold Kolonić, state chancellor of Hungary. Arsenije established five new dioceses in Hungary and Croatia, and with these and three from the old , he established Metropolitanate of Karlovci, established as an autonomous unit of Peć Patriarchate.