Pope Benedict XVI is primarily the head of a church with over 1.8 billion members in every part of the world. But he is also a temporal sovereign. The territory over which he has direct rule, the Vatican City State, may be miniscule, but his political reach and influence is wide-ranging, deep-rooted and incalculable

Wherever he goes, the Pope is received as a Head of State. He is represented diplomatically in countries where Roman Catholicism is only a minority faith.

The reality of this all too human institution, however, is that a pope’s success can only really be measured by his political acumen, not his intrinsic holiness. You have only to consider Pope John XXIII or Blessed Pope John Paul II – both brilliant politicians – to recognise the truth of this.

For centuries, there is unimpeachable historical evidence to show that the Vatican has been a hive of intrigue, political jockeying for position and corruption. Murder, cruelty, hypocrisy, dishonesty and sexual depravity, to name but a few misdeeds, among supposedly morally infallible popes have not been unknown. This is after all an institution not made in heaven, and it is subject to all the weaknesses and vicissitudes to which man is prey.

This is why what is currently going on in the Vatican is of such interest to us as an ostensibly Catholic country now at last with a Cardinal of our own – albeit one who is too old to vote in the next Conclave of Cardinals (the assembly of cardinals that will elect the next pope), whenever that happens. Given that, according to a recently leaked document, the Cardinal Archbishop of Palermo has said that the 85-year-old Benedict will be dead by November this year, recent events are of ever-growing interest to the Faithful in Malta who will no doubt pack St Peter’s Square in Rome to await the first puff of white smoke to celebrate the election of a new pope.

The current saga started almost farcically with Pope Benedict’s butler (shades of what the butler saw) being placed in a 16-foot by 16-foot cell, accused of leaking a host of confidential letters to a journalist, who subsequently broke the story of intrigue, treachery and skulduggery. The papal butler’s incarceration was followed the next day by the firing of the head of the Vatican Bank, Mr Gotti Tedeschi, by the pope’s Secretary of State, Cardinal Tarcisio Bertone. Mr Tedeschi’s dismissal was accompanied by a scathing statement accusing him of failing to do his job efficiently.

An Italian police investigation has fanned fears of more scandalous revelations still to come. In the manner of Roberto Calvi, the prominent Italian banker found hanging from Waterloo Bridge in London in mysterious circumstances in the 1980s, Mr Tedeschi has since been quoted as saying that he fears for his life.

Behind the row with Mr Tedeschi and the jailing of the pope’s butler lies an intense, no-holds-barred power struggle to determine the nature of the next papacy. It is a battle being waged in and around the Vatican’s financial institutions, for herein power lies. The Institute for Works of Religion as the Vatican Bank is quaintly known, is no stranger to controversy as it was accused in the 1980s of involvement in financial chicanery, including the death of Roberto Calvi. Today, it is seeking to clear its name of involvement in money-laundering. According to La Repubblica, a draft Council of Europe report thankfully gives the Vatican a clean bill of health, albeit with eight out of 49 objections (more than 10 objections would have led to a risk of black-listing by the international body that polices banks).

It appears that Mr Tedeschi had opposed a new law, backed by Cardinal Bertone, that increased the Secretary of State’s powers at the expense of the existing, independent oversight body. The change fitted a wider pattern of the acquisition of ever greater influence by Cardinal Bertone since his return to the Vatican six years ago. The 77-year-old Cardinal was the pope’s right-hand man when the then Cardinal Ratzinger headed the department on the enforcement of doctrinal orthodoxy. He is not a true Vatican insider and his underlings in the Secretary of State’s office – like most bureaucrats in other diplomatic elites – resent the punchy, soccer-loving former archbishop for his lack of diplomatic experience.

Intrigue is a staple diet in the Vatican as it is in any other bureaucratic institution where office politics play an inevitable role. What makes this conflict special, however, is Cardinal Bertone’s repeated efforts to wrest the levers of financial control from others. The Cardinal’s enemies say that this is a grab for the patronage that goes with them. Last year he tried to make the Vatican Bank rescue a debt-ridden hospital and Mr Tedeschi’s refusal to do so presaged their latest row. The leaked papal letters also show that Cardinal Bertone tried unsuccessfully to bluff the then Archbishop of Milan into resigning a post that controls the city’s Catholic University.

To strengthen his position further, Cardinal Bertone has promoted three close associates and former subordinates from his north-west Italy region to positions in charge of the Vatican’s treasury, the Vatican’s central bank and as governor of the Vatican City State, the Holy See’s temporal power-base which also carries great financial clout. All three men were promoted to Cardinal in February. These promotions have intensified suspicion among Cardinal Bertone’s critics that he is trying to pack the Conclave that will elect the next pope with his own people.

However, for a Secretary of State to ascend to the throne of St Peter is rare, the only example in the last 350 years being Pius XII in 1939. Whatever his ambitions, Cardinal Bertone is proving a divisive figure. Many had hoped that as a relative outsider to Vatican politics, he would bring transparency, accountability and innovation to a highly centralised bureaucratic machine which was last reformed 45 years ago. The earlier years of Pope Benedict’s papacy saw a succession of diplomatic gaffes from clerical child sex abuse to the mishandling of contraception, homosexuality and AIDS, which many Vatican officials blamed on his inexperience. Little appears to have improved.

As long as Cardinal Bertone remains Secretary of State, the infighting in the Vatican seems likely to continue, and the outside world’s concerns about its administration and governance will remain. The papacy is an institution of great antiquity, history, riches and splendour. It commands admiration even when there is no specific allegiance. It is an institution which appeals to the imagination and our collective sense of history.

But the papacy also has a need to keep its traditions alive by a judicious openness to change. In this, the papacy has a hard task, since it rests ultimately upon theological doctrines that are facing growing challenges. The papacy has yet to adapt to modern mores, and this will undoubtedly have to await the arrival of Pope Benedict XVI’s successor. As this latest saga shows manoeuvering for that event is well under way.