ROME – When Pope Francis recently addressed the ongoing financial reform of the Vatican, he couched the argument in largely spiritual, pastoral and moral terms.

Financial breakdowns recently brought to light, the pope said, “beyond their possible criminality, are hard to reconcile with the nature and purpose of the Church, and they’ve created confusion and worry within the community of the faithful.” He was speaking to Vatican judges on the occasion of the opening of their judicial year.

Though the pope avoided specifics, the reference almost certainly was to a recent contretemps involving a $220 million land deal in London (mostly financed by collections from Peter’s Pence) in which the Vatican’s Secretariat of State allegedly tried to skirt reporting requirements for a loan intended to buy up the remaining shares of the property. That’s an especially alarming development, given that the Secretariat of State also bears the lion’s share of responsibility for enforcing the Vatican’s own accountability and transparency measures.

Francis is indisputably right that such shenanigans are tough to square with the Church’s moral teaching or the clear injunctions of the Gospel. Yet the hard truth is that such contradictions, by themselves, rarely have been enough to spur real reform. Instead, the Church tends to react in most compelling fashion only when facing some external threat.

The rise of the great mendicant orders, for instance, came in response to the rapid urbanization of the high Middle Ages and the threat of losing the city poor. The Council of Trent, and the internal housecleaning it unleashed, were driven by the Protestant Reformation and the loss of half of Europe.

So, what’s the threat the Vatican is facing today? In a word, here it is: Money.

When Francis was elected on a reform mandate almost seven years ago, cardinals were motivated in part by a suspicion that in financial terms, the Vatican’s ship was taking on water. That’s really all it was back then, a suspicion, since no one actually knew how much money the Vatican was losing, but there was a palpable sense something was amiss.

Since then, the reality of the situation has become steadily more apparent. The Vatican is carrying a bloated and unsustainable payroll, it has extensive real estate holdings that return virtually no profit, and it faces a looming pension crisis which, if left unaddressed, could produce a financial Chernobyl all by itself.

Last October, Italian journalist Emiliano Fittipaldi predicted that the Vatican would be bankrupt by the year 2023. Despite the reassuring tones of Bishop Nunzio Galantino, Francis’s handpicked chief of the Administration of the Patrimony of the Apostolic See (APSA), that there’s no risk of going broke and all that’s needed is a spending review that’s already underway, many insiders will tell you that Fittipaldi’s projection isn’t that far off unless something dramatic changes.

Added to that already alarming scenario is the threat that due to the recent cycle of scandals and departures of key personnel associated with the reform cause, the Vatican could return to global “blacklists” of suspicious financial actors. Should that happen, it would become much more difficult for the Vatican to access international currency markets, and it would face significantly enhanced transaction costs as banks and regulators insist on rigorous due diligence measures to process any Vatican money.

That threat of returning to semi-pariah status is hardly theoretical, since this spring the Vatican faces its next round of review by Moneyval, the Council of Europe’s anti-money laundering agency and the primary gatekeeper for European states to global “whitelists” of virtuous actors. In theory, should Moneyval conclude that the Vatican is backsliding on its stated commitment to reform, failing to enforce the ambitious new laws on transparency and accountability adopted under Pope Francis, it could lead to censure from the Financial Action Task Force, the global network of anti-money laundering evaluators.

If you ever wonder whether such denunciations make any difference, consider the example of Liechtenstein. Once considered a classic example of a rogue nation, Liechtenstein was hit with a series of FATF sanctions in the late 1990s that took a significant toll. According to the 2011 book The Money Laundry by J.C. Sharman, from 2000 to 2002 the net income of banks in the tiny country fell from $560 million to $255 million, tax collections on banking activity plummeted from $65 million to $27 million, and assets managed dropped from $114 billion to $97 billion.

“It was a real disaster,” one official was quoted as saying. “Our foundations trembled.”

The fallout got the attention of Liechtenstein’s bankers, and they cleaned up their act. (Ironically, Swiss lawyer René Brülhart, recently forced out as head of the Vatican’s Financial Information Authority, made his reputation as director of Liechtenstein’s financial intelligence unit from 2004 to 2012, where he spearheaded the clean-up operation.)

If Pope Francis truly wants change on Vatican finances, in other words, perhaps he shouldn’t put all his eggs in the basket of metanoia and personal conversion, however desirable those things obviously are.

Maybe what he really needs right now is somebody to put a gun to the head of the system … and, as fate would have it, Moneyval may be ideally positioned to do just that very soon.

Follow John Allen on Twitter: @JohnLAllenJr

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