The Vatican decides to act the Martyr during the war. Pope Pius issues Papal Bulls revealing in plain terms the full extent of Nazi atrocities. He's arrested. The Papal Conclave flees to Portugal.
Across Nazi-occupied Europe, Catholics are rounded up. Many bishops are tortured and killed. Every day, Allied propaganda carries stories of heroic martyrdom by Catholics, and increasingly, dissident Protestants, across Europe. The Pope himself is kept incommunicado in a bunker in Austria.
After the war, the Papal Conclave returns to Rome and sets out rebuilding the church's infrastructure. And with the Cold War looming, the CIA and western intelligence agencies believe the church (Catholic and Protestant) is the only organization in Europe who can match the communists in social prestige. Church clergy enjoy as much social status as war veterans, and any respectable person at least pretends to be in church on Sunday morning.