Then again, it might. Willingly stepping into the cattle car because it is the least painful choice at that instant (i.e. pragmatic) is not necessarily pragmatic over time.
Inasmuch as it's a self-contained, self-managed and self-defended religious city respected the world over
Self-contained...as in "Italy wouldn't give them any more land."
Self-managed...as in "this is the last vestige of papal power after nearly 2 millenia."
Self-defended...as in "no one in the world threatens VC except the occasional lone nut hoping to steal or damage something as a statement." Who are the Swiss Guards going to fight off, a bunch of pocketbook-wielding Italian grandmothers pissed off that the Pope's theology means that their whorish grandkids can't get an abortion? Come on, they have fooking SPEARS!
I appreciate you trying, but as I said, this is not a problem that can be solved. One party's compromise position is that it may allow the other to survive for a few years, so long as the world bribes it with sufficient billions of dollars.