Pope Francis: A missing (and a misplaced) sovereignty

The letter in which Pope Francis asked the cardinals to limit expenses and find external funding for the Holy See arrived almost unexpectedly. Sent Friday, 20th September 2024, the letter had some of the usual papal rhetoric against the alleged “resistance” to reforms. It took a while to get to the poijnt, too. Finally, , the reasoning was simple: The Holy See is running in the red, expenses must be contained, and external resources are better if found.

None of that is new.

Rumor has it that a major donation from a foundation guarantees the salaries of an entire Vatican department. It is also rumored that donations cover collateral expenses such as those for the organization of the last consistories. However, that the Pope took up pen and paper to write the letter personally and made the situation public is noteworthy. It almost seems like the Pope, by making the difficulties public, wants to wash his hands of all responsibility.

If there is a deficit, the subtextual reasoning runs, it is because of previous uncontrolled spending. This reasoning, however, leads to a further question: If the cardinals must raise funds for the Holy See or for themselves, how will the Holy See’s independence be guaranteed?

The letter, after all, takes us back a bit to the Middle Ages, when the Church without structures depended on donations, and the alliance of throne and altar was sealed precisely because of economic and financial needs. But, depending on kingdoms and lords for economic sustenance, the Church could not exercise its mission. It was subjected to pressure. It could not make all the decisions.

Over the years, the Church has worked to guarantee its independence and sovereignty. The Papal State was a means, a territory that gave the Pope secular power but also, above all, his own citizenship, independent from that of each State. The Pope could be German, French, Dutch, or Italian. When he became Pope, he was king of the Vatican City State, independent and free from any kingdom.

This position allowed the Church to be a mediating force and preserve its members’ religious freedom. There is no need to be naive. There were mistakes and historical situations that could not be accepted today. They were contingent situations.

Especially in the last century, the Church, with the Papal State invaded, worked to recreate its independence. Even the mission work, starting with Benedict XV, was aimed precisely at freeing itself from the influences of the States, from the protectorates that controlled the mission territories.

Economic independence needed to be implemented. That came with the Conciliation with the Italian State and the Lateran Pacts, which established compensation to the Church of about 1.7 billion for the almost 50 years of conquest and occupation. This money was used to build the Vatican City State, fix the now crumbling nunciatures, and outline a financial and investment system that would allow the Holy See to have its own sovereign funds.

The Holy See’s finances were so solid that, after the IOR / Ambrosiano scandal, the IOR decided to make a voluntary contribution of 406 million dollars for shareholders who had lost money while not admitting liability. Despite this, the IOR’s accounts soon returned to the black.

The Vatileaks cases, under Benedict XVI and then Pope Francis, attacked a Holy See that had worked well to create its independence and improve financial transparency. Soon after establishing the Financial Information Authority, the Holy See abandoned the fishing policy of the Bank of Italy, opting for a more international board. Immediately, the first anti-money laundering law, inspired by the analogous Italian law, was reformed to reflect the characteristics of the Holy See.

It is perhaps impossible today to define how interests intersected and how, then, despite the work of Benedict XVI, the wolves who only wanted to exploit the Holy See and place it under the cone of influence of other finance, other powers, and other ideas returned with Pope Francis. But they are forces that had an easy game for three reasons:

• A pontificate that had no ties to, nor knowledge of, tradition.
• The fear of a natural or presumed scandal was revealed during the general congregations that had elected the Pope.
• The non-institutionality of Pope Francis, who tends to consider finance as an instrument but does not think in terms of financial or governmental structure.

So, in these 11 years of pontificate, investments have been abandoned, and heavy penalties have been paid. Vatican officials have relied on expensive external consultants who have weighed on the balance sheets but have not provided essential contributions. However, they have tried to give the Holy See a financial structure that made it too similar to a company, with a great debate. (Remember the revocation of the audit agreement with Price-Waterhouse in 2015?)

A financial bloodbath, sometimes precipitated by hasty decisions, which we immediately tried to attribute to previous poor management. It has been a long season of trials in the Vatican, held inside and outside the walls, with mixed results. As we write, we are awaiting the verdict in the trial on the investment of the Secretariat of State in a luxury property in London, which involves Cardinal Angelo Becciu, a verdict in London linked to this trial, and the results of another trial in Malta which sees the Institute for the Works of Religion among the accused.

The Pope responded first by complaining that charity cannot allocate 70 percent of the funds to salaries, then called for a tightening of institutional expenses, then asked everyone to pay for their own houses, even service ones, at market price (but one wonders what the actual market value of the Secretary of State’s apartment is, which is also unsellable and unrentable because it is located inside the Apostolic Palace).

After having centralized everything, amid a financial crisis that the COVID period has only exacerbated, Pope Francis has taken pen to paper, asking for collaboration.

At the beginning of Pope Francis’ reform, there was talk of a sovereign fund and thunder against the “tucked away” money of the dicasteries. This was money from private donations explicitly intended for the dicasteries, but this was not considered. Now, instead, private contributions are favored.

Fine.

Only, how will the Holy See maintain its independence?

Is the collapse of the Vatican system today the result of previous mismanagement? And, above all, what has been done to stem this continuous loss of money, apart from complaining about the expenses of the last period?

We are at the end of a Vatican financial and economic system that was born to guarantee the Holy See its sovereignty. Like any State, the Vatican must have a sovereign, tax-exempt place. This place will remain, but it will lose the supermarket. That, too, will be contracted out to an external supermarket chain, thus taking away an essential resource for the Holy See and a place where employees could shop with a slight advantage due to the absence of taxes.

It is, in essence, the end of the world.

But it remains to be seen whether these decisions end the Holy See’s substantial sovereignty. This topic has been discussed very little, yet it is crucial.