Europe is in deep trouble.
It has become clear that although the Euro may not collapse if there is not much deeper economic integration and vast financial transfers; it would certainly be safer if it did have these.
Deeper integration, and the transfers, will need a new European Treaty.
This is going to be the coalition's first big test.
The new government now finds itself in the driving seat, and far more quickly than anyone expected.
Essentially the Conservatives dictated that they would have control over European policy when they agreed to the deal with the Liberal Democrats.
The Conservative Party also went to the electorate with the promise that they would put any new European Treaty to a referendum.
The moral case for a referendum if there is a treaty is clear.
So what is the practical case? The Liberal Democrats are committed to deeper European integration, and although they have sometimes called for referendums on it, they voted for the new European Constitution, in the shape of the Lisbon Treaty, without a referendum - and so broke with their manifesto commitment.
However the Liberal Democrats are a junior partner, they have accepted that Europe will be a Tory prerogative and they know that they are not going to be bringing the government down on an issue where they are unpopular.
So the Liberal Democrats may resent this - including some of the most pro-Tory of them - but they are unlikely to make this a deal breaker, at least not publicly.
There are three options open to Cameron.
Firstly he can agree to deeper integration without significant concessions, or he can obstruct or he can push for a new balance within Europe.
Despite a Eurosceptic pedigree and a manifesto pledge, it's possible that Cameron would quite simply sign up to a new constitution without a significant and real repatriation of powers and without a referendum.
However, UKIP is a danger in these times of coalition politics.
The Liberal Democrats are now a party of government, the Labour Party is in danger of appealing only to the most left wing 40% of the electorate and the BNP are still very nasty.
UKIP no longer have to convince people that they can win an election; they can simply call for protest votes.
And Europe is their signature issue.
UKIP's stumbling block is that despite a reasonably competent central leadership, they have a serious shortage of talent beyond the core leadership.
The last thing that the Conservatives need is a haemorrhaging of activists and small donors to UKIP.
Cameron has to hold strong on Europe.
So it looks like either obstruction or a new settlement.
What would those options look like? We'll come back to that in another blog post.
It has become clear that although the Euro may not collapse if there is not much deeper economic integration and vast financial transfers; it would certainly be safer if it did have these.
Deeper integration, and the transfers, will need a new European Treaty.
This is going to be the coalition's first big test.
The new government now finds itself in the driving seat, and far more quickly than anyone expected.
Essentially the Conservatives dictated that they would have control over European policy when they agreed to the deal with the Liberal Democrats.
The Conservative Party also went to the electorate with the promise that they would put any new European Treaty to a referendum.
The moral case for a referendum if there is a treaty is clear.
So what is the practical case? The Liberal Democrats are committed to deeper European integration, and although they have sometimes called for referendums on it, they voted for the new European Constitution, in the shape of the Lisbon Treaty, without a referendum - and so broke with their manifesto commitment.
However the Liberal Democrats are a junior partner, they have accepted that Europe will be a Tory prerogative and they know that they are not going to be bringing the government down on an issue where they are unpopular.
So the Liberal Democrats may resent this - including some of the most pro-Tory of them - but they are unlikely to make this a deal breaker, at least not publicly.
There are three options open to Cameron.
Firstly he can agree to deeper integration without significant concessions, or he can obstruct or he can push for a new balance within Europe.
Despite a Eurosceptic pedigree and a manifesto pledge, it's possible that Cameron would quite simply sign up to a new constitution without a significant and real repatriation of powers and without a referendum.
However, UKIP is a danger in these times of coalition politics.
The Liberal Democrats are now a party of government, the Labour Party is in danger of appealing only to the most left wing 40% of the electorate and the BNP are still very nasty.
UKIP no longer have to convince people that they can win an election; they can simply call for protest votes.
And Europe is their signature issue.
UKIP's stumbling block is that despite a reasonably competent central leadership, they have a serious shortage of talent beyond the core leadership.
The last thing that the Conservatives need is a haemorrhaging of activists and small donors to UKIP.
Cameron has to hold strong on Europe.
So it looks like either obstruction or a new settlement.
What would those options look like? We'll come back to that in another blog post.
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