Foreign policy is rarely decisive in general elections. But it reveals something about the character of a political party and whether its leadership is oriented towards the future or the past.

After the Irish referendum result, a decade of deadening debate over the European Union's institutional shape is finally coming to an end. Every European government is breathing a sigh of relief. Every mainstream opposition party is looking to the future. Every mainstream opposition party, that is, except the British Conservatives. Because David Cameron is stuck gazing in the rear-view mirror.

The passage of the Lisbon treaty is a massive opportunity for Europe. In the coming decades, as economic and political power shifts eastwards, there is a danger that we could see the emergence of what some call a 'G2 world' in which the US and China shape the major decisions on financial regulation, climate change and nuclear proliferation.

I don't want that. We should strive to create a world in which Europe, with a strong Britain at its heart, is a leading actor. With the world's biggest single market and largest aid budget, the European Union (EU) should be a force for peace and stability in foreign policy as well as for dynamism and openness in economic policy.

In the last two years the EU has launched a naval force against piracy off Somalia, sent police and judges to keep the peace in Kosovo, imposed sanctions against Zimbabwe's Robert Mugabe when the United Nations failed, and led the fight against climate change. But if the EU is to help shape the 21st century, it must first make progress in three key areas. In each, the Lisbon treaty will help us to focus on what matters most.

First, the EU's reputation abroad rests on engaging countries on its borders. If we cannot take responsibility for stability in the Balkans, why should we be trusted further afield? If we cannot forge a serious relationship with north Africa, how can we be credible in preventing conflict, terrorism and illegal migration?

Second, we need to build the EU capacity to intervene in crises, particularly in areas that impact on our security such as south Asia and the Middle East. It is a damning indictment that we can still only deploy five per cent of our soldiers at one time, or that we spend only about half a euro per head in a country so strategically important as Pakistan.

Third, the EU needs to develop a new relationship with other great powers: the US, Russia, China, India and Brazil. The EU is the biggest global economic power, but it does not translate this into wider influence on security, human rights or climate change. The rotating presidency has - until now - meant that the EU has no consistent leadership.

This government's Europe agenda is clear. But Conservative policy is marked by delusion and dither. David Cameron has been deliberately vague about "not letting matters rest" on the Lisbon treaty. The pragmatic option is to accept the treaty. But pandering to Eurosceptics helped win Cameron the leadership of his party. If he performs a U-turn, he will reopen the civil war that consumed the Tories in the 1990s. Cameron could accept that, with the treaty signed, the decision is stark: in or out. But the Tories must know that the public and business would be appalled at the prospect of a slipway out of Europe, taking us back to 1973.

That leaves 'renegotiation' of Britain's relationship. Instead of focusing on the great global challenges, Europe would be sucked back into arcane discussions about rewriting the EU rulebook - and all 27 countries would need to agree to any change. It is not serious.

Any country with something it wants from Britain would have us over a barrel. Our ability to argue for open trade, European enlargement and reform of the common agricultural policy would be compromised.

We have seen how quickly Cameron's bold plans on Europe disintegrate into farce. He promised to reconfigure the European parliament, yet only managed to surrender his party's influence, swapping the respected European mainstream for the wilder fringes of far-right European politics.

Britain will not be able to tackle the economic challenges it faces unless we work with European allies. We cannot tackle climate change, international crime or energy if we refuse to deal seriously with Europe. Nor can the Tories hope to offer responsible government until they are straight with the British public.