Contrary to some breathless reports in the conservative press, the Obama administration isn’t downgrading U.S. diplomatic relations with the Vatican. As the State Department’s explanation notes, 1) there’s no downgrade of representation or staff reduction; 2) the ambassador’s residence isn’t moving; 3) the move of office staff will protect them better from terrorism, and within the guarded U.S. compound they’ll be in a separate building with separate address and entrance; 4) all countries with Vatican embassies already locate those embassies outside VC territory and many co-locate with their general Rome embassy serving Italy.
However, although the Obama administration isn’t downgrading U.S. ambassadorial relations with the Vatican, it *should* downgrade them. From 1867 to 1984 the U.S. had no such relations (which of course was consistent with keeping up a free flow of communications between the two entities) and it was a lapse for President Reagan to depart from this sound approach. Religions are not countries and we rightly would not consider opening embassy-level relations with other religious entities. Vatican City has a population estimated at 840, a long way short of the historically genuine if small local populations of statelets like San Marino and Liechtenstein (about 30,000 each). And even if we agreed to give Vatican City the same treatment as these much larger statelets we’d want to change current practice. As a friend writes to explain:
Our ambassador to France is also our ambassador to Monaco (without a permanent physical plant onsite in Monaco) and ditto for Spain/Andorra and various other combinations. The Vatican (presumably for fear of opening the floodgates) doesn’t accept ambassadors who are also their sending country’s ambassador to Italy (although San Marino is not so picky) so some smaller countries have e.g. their ambassador to Switzerland also accredited to the Vatican.