Yeah - instead of having the entire West be dependent on him, Austria wants to make himself dependent on France and Burgundy. It's completely irrational but there's not much I can do about that.
EDIT: To put it in context, there were two offers for Austria on the table today. My alliance offered Naples if he'd help us take back three provinces in Spain for Spain, after which he'd go back to guaranteering both sides.
Outcome: My alliance slightly weakened, their alliance slightly weakened, Austria slightly strengthened.
The other offer was for him to join France and Burgundy, get Naples, and FRA+BUR would take 10-15 provinces from me, after which he'd leave France and Burgundy free to pummel us until we were gone.
Outcome: My alliance vanishes, France and Burgundy massively massively strengthened, Austria slightly strengthened.
Which looks like a better deal to Austria?