The Holy See: The State of the Vatican City is a sovereign nation state whose territory is entirely located within the Italian capital city of Rome. Indeed, the Holy See holds the distinction of being the smallest independent state in the world. The Holy See is also the center of the Roman Catholic Church, and as the supreme body of government of the Catholic Church, it is a sovereign juridical entity under international law.
Popes in their secular role ruled portions of the Italian peninsula for more than a thousand years until the mid 19th century, when many of the Papal States were seized by the newly united Kingdom of Italy. In 1870, the pope's holdings were further circumscribed when Rome itself was annexed. Disputes between a series of "prisoner" popes and Italy were resolved in 1929 by three Lateran Treaties, which established the independent state of Vatican City and granted Roman Catholicism special status in Italy.
In 1984, a concordat between the Holy See and Italy modified certain of the earlier treaty provisions, including the primacy of Roman Catholicism as the Italian state religion.
The Holy See has been headed by Pope Benedict XVI since Pope John Paul II died in 2005 after a 26-year pontificate. The 2013 announcement of Pope Benedict's abdication sets the path for a new pontiff to take office.
The center of the Papacy and the residence of the Pope, the Holy See operates from Vatican City. It is also the residence of the Pope and priests and nuns of many nationalities make up much of the resident population.
The Holy See's unique, noncommercial economy is supported financially by an annual contribution from Roman Catholic dioceses throughout the world. Other income is derived from the sale of postage stamps, coins, medals, and tourist mementos, as well as from fees for admission to museums.
Present concerns of the Holy See include religious freedom, international development, the environment, the Middle East, China, the decline of religion in Europe, terrorism, inter-religious dialogue and reconciliation, and the application of church doctrine in an era of rapid change and globalization. About one billion people worldwide profess the Catholic faith.