"The Montevideo Convention (1933) specifies the criteria for nationhood:
(1) A permanent population,
(2) A defined territory,
(3) Government,
(4) An ability to conduct international relations.

Some International Law professors add a 5th, informal criterion - recognition by other countries."

This from Maher is very useful. None of these criteria preclude religion as a basis of state. However, using religion as a basis of state can complicate how a state conducts foreign policy (i.e., is there the equivalent of a dar al-islam/dar al-harb distinction) and how a state classifies its population (i.e. are only orthodox coreligionists part of "the people").

Moving beyond the Vatican, it is worth noting that many European countries that are quite pluralistic in culture maintain established churches. Even in the US, there are significant tax breaks for religious professionals and institutions, and church-state issues crop up all the time in constitutional jurisprudence. Massachusetts actually did not distestablish its church until 1833.

I haven't read on this topic in 20 years, but I recall vaguely one argument for why European churches lost so many people during late 19th-century industrialization and urbanization. Established churches supported by state tax revenues and oriented toward rural life did not move quickly enough to build infrastructure and structures of help for people in new (and often quite horrible) urban/industrial settings. Socialist parties filled the gaps left by the state churches, and became a meaningful part of the practical and ideological lives of the industrial working class.

As an aside, I think that part of the reason the United States still has a relatively vibrant economy and risk-taking culture is precisely because we DO NOT have an official state religion. By nature, religions are conservative. Dogma doesn't change. That's kind of the point. If religion were allowed to permeate every facet of society, progress would slow down even more so than it currently seems to be.

@ Kuta - tell that to Italy in the Renaissance or Great Britain in the industrial revolution.

. . . Or the Buddhist Kushan Empire, or the Islamic Abbasid Caliphate. Your karma might run over your dogma, but in fact core religious principles do evolve over time, and many states with a core religious ethos have been extraordinarily innovative, entrepreneurial and risk-taking.

@ Jeff

Seems like the other side of the coin could be exploited too by pointing out a whole slew of secular states the aren't doing that well. I don't see religion as having a stultifying effect on the economy from just the evidence you gave us.

@Jeff,

I don't think that point really works, given that Americans are, on the whole, a very religious people. Why would a *state* religion have a worse effect on creativity than the religion that people are participating in anyway?

I do find ges's point very interesting, that a state church actually hurts the church.

@JK I defer your principle to Maher. Sticking with your argument a little further:

(1) requirement: military -- fulfillment: Swiss Guard (per capita the Vatican is among the most militarised states you may find in the world, this result is consistent with theoretical predictions by IRT, eg. Hans Herbert Herz, Walt, Waltz or Mersheimer) The fact that the Vatican is a microstate does not change this (only the scale).

(2) requirement: economy --- fulfillment: real estate, libraries, schooling, art and history, tribute (from Italy, which implies Italy is but a vassal to the Vatican and hence Italy's status as a state is questionable), banking, money laundring, etc.

economies form through specialisation. You might very well think that only some forms of specialisation do count, little JK, I can't possibly comment (you are welcome though to pay tuition, this might help here).

@KC on nearly all accounts. As the argument is a little long by now (due to the amount of your claims), and because you are still in college, I suggest you go to the Int'l Law department of your library, check for the compartment "other subjects of int'l law," grab a book or two on the topic (ie. not Maltese Order nor ICRC) and go to your favourite coffee place, take smoke and a coffee, enjoy the sun and the good read. Trust me, after 2 hours max you would agree with me.

@ramsu No, the Holy See does not issue passports. The Vatican does. Service passports and its ilk are special exceptions and do NOT confer anything close to citizenship. The Holy See conducts most (not all) diplomatic relations of the Vatican on its behalf (as does Switzerland for the US in Iran) and can do so as the Holy See is a subject under int'l law. It is not and has never been a state and will never be a state. That it can behave in many things as a state results from its character as a PIL subject. It's as simple as that. In case you did do legal studies, I'd be happy to learn your school's whereabouts.

I know the Cromwell puritan dictatorship is an interesting example, though i couldn't if that ended up being beneficial or feasible.