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VATICAN LETTER Jul-9-2004 (1,010 words) Backgrounder. With photo. xxxi

As some U.S. dioceses face financial crisis, Vatican has own problems

By John Thavis
Catholic News Service

VATICAN CITY (CNS) -- When the Archdiocese of Portland, Ore., filed for bankruptcy in early July, some people wondered why the Vatican didn't bail it out.

The head of a sex abuse victims group in Portland said the Vatican needs to "sell a few paintings if they think they can't afford to pay for this." The archdiocese had been hit hard by sex abuse settlements totaling more than $50 million.

But the Vatican is highly unlikely to start selling its paintings or statues in order to rescue a diocese from financial ruin. The Vatican does not see its role as that of overseeing diocesan budgets or financial crises.

And besides, the Vatican doesn't think it's rich.

"I wish we were. If we had so much money, we wouldn't have to go around holding out our hands to the world's dioceses," said Cardinal Sergio Sebastiani, head of the Prefecture for the Economic Affairs of the Holy See.

As for selling part of its artistic patrimony, the cardinal dismissed the idea, saying the works are not the kind one could put on the market.

"The Vatican's paintings have no commercial value. There are a lot of fables about the riches of the Vatican ... but the reality is much more prosaic," he said at a Vatican press conference July 8.

In fact, a popular saying among Vatican number crunchers is one attributed to a Latin American archbishop: "I can do more with one dollar than the pope can do with Michelangelo's 'Pieta.'"

While the universal church's hierarchical structure can mean direct -- and sometimes swift -- Vatican intervention in pastoral and dogmatic affairs, budget problems are left to the local church to resolve. The Vatican does not assume responsibility for diocesan financing in nonmissionary countries, although it may be called upon to approve major sales of church properties. Even the budget for the Diocese of Rome -- the pope's own diocese -- is managed independently of the Vatican.

All that may help explain why Cardinal Sebastiani, asked by reporters about the Portland bankruptcy two days after it was announced, said it was news to him -- and that in any case it was outside his competence.

The bankruptcy in Portland was certainly being followed by some Vatican offices, but not with a view toward financial intervention.

"The Vatican would never get involved in the budget affairs of a diocese. Financially, a diocese is an autonomous entity. If it were a case of gross mismanagement by a bishop, the Vatican could intervene, but not to resolve a budget crisis," said one Vatican official.

The Vatican has enough problems managing its own budget these days. In 2003 the Holy See ran a sizable deficit for the third straight year, despite cutting back costs. It blamed the falling dollar and sluggish investment markets for the shortfall.

What's often overlooked when the Vatican discloses its annual financial figures is the size of the total numbers. In popular imagination it may be fabulously wealthy, but the Vatican has a yearly operating budget of just $260 million.

That's less than half the budget of major universities like Notre Dame, and about one-third the budget of U.N. specialized agencies like the Food and Agriculture Organization.

The Vatican's net worth is difficult to gauge, but has been estimated at close to $1 billion. That would be less than the endowment funds of many major universities in the United States.

In the wake of huge settlement payments on abuse cases, a few U.S. dioceses have announced plans to sell off property. The Archdiocese of Boston, for example, recently sold land and the archbishop's mansion to help pay back $90 million in loans used in settlements.

At the Vatican, property sales are not seriously considered, even in times of hardship. Most of its choice property lies inside the Vatican walls; the buildings used for institutional purposes are listed as having no commercial value.

So on the ledger card, the pope's six-story Apostolic Palace, with its gilt ceiling and frescoed walls, is simply entered as a debit, reflecting cleaning and upkeep costs.

The perennial problem at the Vatican is generating income. That's why the Vatican holds out its begging cup every year, asking dioceses to pitch in. Despite the abuse scandals, donations from Catholics, dioceses and religious orders in the United States have remained steady in recent years, Vatican officials said.

To spur more generosity, the Vatican in the 1980s began publishing a consolidated financial statement, detailing expenses and income. But while finances have become much more transparent, it's still not always easy to figure out the money flow at the Holy See.

The Holy See financial statement covers the costs of running the Roman Curia -- congregations, councils, tribunals, commissions, media, and several educational and cultural institutions, along with 118 nunciatures around the world.

But figured separately are the budgets for Vatican City State, the administration of St. Peter's Basilica, the Vatican bank, the Vatican's missionary aid societies, and several other institutions connected with the Holy See.

Complicating the picture even more is that some of the agencies included in the Holy See's financial statement, including the Congregation for the Evangelization of Peoples, manage their own investments independent of the Vatican's main investment program.

There is one major oversight body for all the Vatican's financial operations, the 15-member "Council of Cardinals for the Study of the Organizational and Economic Problems of the Holy See." Pope John Paul II established it as a type of "wise men" panel to provide guidance on a host of issues, including the Vatican bank scandal of the early 1980s.

In early July, the council met to review the Vatican's latest deficit figures and suggest ways to resolve the problem. Among those participating was Cardinal Bernard F. Law, who remained a member of the council after he resigned as archbishop of Boston in 2002. His former archdiocese, the epicenter of the sexual abuse crisis, is now struggling with the financial consequences of settlements of more than $120 million.


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