And yet, in many ways, the Pope is our servant, our teacher, our mediator, and our counselor. The pope has guided the Church through schisms, revolts, wars, and sex scandals, has soothed international arguments, taught the people about the love of Christ, and has served to bring his believers closer to the Christian heaven.
But whether the Pope is seen as a dictator or a souped-up priest, one thing remains certain: the Pope holds enormous political power in those old and frail but commanding hands. He is more than a peace-loving figurehead. In fact, Urban II was everything but a pacifist. From the spreading of Christianity under St. Peter to the Crusades of Urban II to John Paul II's work during the Cold war, history has shown that papal authority has made a profound influence on world events. "Vatican diplomacy is so influential and can exert such great power in the diplomatic-political field because it has at its disposal the tremendous machinery of a spiritual organization with ramifications in every country of the planet."
The Vatican is the world's smallest independent sovereign state and, just like any other country, seeks to further its own interests. Unlike most countries these interests, are strictly spiritual goals. And also unlike most countries, the Pope does not command a military (the Swiss Guard is not the Vatican's military). But though the Pope has no direct control over any military force, the Pope has used his position, prestige, and charisma to incite and justify a holy war. The reason why "Vatican diplomacy is so influential" is because the Pope is first and foremost a holy man, and the words of a holy man are immediately assumed to be wise, educated, and sometimes completely infallible and correct. The Pope is the leader of one of the world's largest single organizations, and the advice of a man who can trace his lineage all the way to the 30th Year of our Lord is not to be taken lightly.
For more information on the Papacy, Papal Authority, and Papal Infallibility see:
http://en.wikipedia.org/wiki/Bishop_of_Rome
http://en.wikipedia.org/wiki/papal_infallibility
http://en.wikipedia.org/wiki/Pope_John_Paul_II
The Pope is indeed a powerful figure in the religious community, yet he can only do so much for the world...most Christians believe that the Pope is always a wise and holy person, but like Pope John Paul II all popes were once ordinary people like you and me.
It ought to be noted that the pope, though capable of exercising political influence by way of his great spiritual authority, is not really a monarch or a political figure. Though he is the primate of the Catholic Church, he himself is not the absolute head of it. As this latter role is, of course, played by Christ, the pope can not claim the absolute suzerainty or power over his spiritual "subjects" that the neo-absolutist emperors of the late nineteenth/early twentieth centuries (such as the tsar, the kaiser, or the sultan) could over their temporal ones; the Church recognizes that conscience and Christ over anything that it might teach. Vatican State, meanwhile, consists of a grand total of slightly over a thousand priests, a modest kingdom by any standards.