I have to say that having heard loads of nay-saying about "M2TW diplomacy is broke" and "it doesn't work" and "the campaign AI is stupid!" that I'm having a great campaign as england on Vh/Vh, mostly cause i'v spent a lot of time and effort on the diplomatic front. I think that the trick is that you have to work at your relationships - keep in touch with your allies and keep an eye on your foes. I allied with the French (outrageous, I know) on my very first turn by marrying my faction heir to a princess of theirs and that forged an alliance which has lasted for over a hundred turns so far. Knowing that the HRE and Denmark would surely attack me, I allied myself quickly to Poland, the Vatican and Portugal and, more recently, to Venice. Again, I have worked on ym relations with my allies; periodically giving them map information or a thousand here and there to keep relations "amiable" or higher. Not a single Alliance has been broken because we have great relations. I can't help but conclude that all those nay-sayers who are whinging about the diplomacy being broken and complaining that alliances aren't worth diddly-squat are simply lazy: an alliance is only worth that which you put into it. If you make an alliance with someone early in the game and don't ever do anything to sure up your relations then they will eventually turn against you - it figures.

Again, by using the diplomatic channels, I have secured tens of thousands of cash from warfare. I have never started a war, but have brought about devastating retribution for those who have crossed me and as a result my diplomatic reputation is reliable. By demanding extortionate money for cease-fires when enemies realise their error of attacking me and for attacking common enemies with allies and again demanding monies there's a lot to be made through diplomacy and this can be used to pay for diplomacy. Diplomacy pays, folks, diplomacy pays.

In my latest "coup de grace", I have literally negotiated global peace! Due to my massive armed forces I was making less than ten thousand cash profit per turn so decided that I needed peace. I sold a cease fire to Milan for twenty thousand and used that coupled with my two, unmarried daughters to broker a couple of other alliances which netted the result of every war ceasing accross the globe! I couldn't believe it! Shows what can be acheived when you're a diplomatic power-house who is trust-worthy, powerful and influential. Oh, did I mention that the last two popes have been English?

Diplomacy takes some effort but is extremely rewarding and adds a fantastic dimension to the game.