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I know the actual PoD would be before 1900, but focus of the discussion should be how such a state would affect modern world politics, and the expanded role of the Catholic Church in the modern world with the institution actually controlling the equivalent of a mid-sized country.

So, how would the Papal States (or any sucessor, with the Pope as the Head of state, that might encompass a larger share of the penninsula) work in the modern world?
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