In context, Benedict stated:
The [Roman] Catholic Church is eager to share the richness of the Gospel’s social message, for it enlivens hearts with a hope for the fulfillment of justice and a love that makes all men and women truly brothers and sisters in Christ Jesus. She carries out this mission fully aware of the respective autonomy and competence of Church and State. Indeed, we may say that the distinction between religion and politics is a specific achievement of Christianity and one of its fundamental historical and cultural contributions.(insertion of "Roman" and emphasis are my own) This is an interesting claim coming from a man who is both the head of a church and the head of state of small nation. In fact, as the Vatican's own web site announces:
Even though Vatican City has no direct access to the sea, by virtue of the Barcelona Declaration of 1921, it is allowed to sail its own vessels flying the papal flag. However, the Vatican does not avail itself of this right at this time.(source - cache of source)
That was not always the case, as many ships - even warships - have flown under the papal flag. As described by the Rosary Magazine:
The Flag of the Vatican(source)
The papal flag is comparatively unfamiliar outside of the Eternal City. The war flag of the defunct temporal power of the Pope was white and in its center stood figures of St. Peter and St. Paul, with the cross keys and tiara above them. The flag of the merchant ships owned by the subjects of the States of the Church is a curious combination, half yellow and half white. In the banner used by the Crusader King of Jerusalem, Godfrey, the only tinctures introduced were the two metals, gold and silver, five golden crosses being placed upon a silver field. This was done with the intention of making the device unique, as in all other cases it is deemed false heraldry to place metal on metal.
For more information on how the Church of Rome began to accept as an inescapable fact the general separation of Church and State, see this interesting book on the "The Last Days of Papal Rome" (link).
Benedict's comments are generally in accord with the spirit of Vatican II, but they are as out of touch with history as can be. The movement for separation of church and state is not properly attributed to Catholicism but to "Protestantism" (broadly used) and more especially to the Separatists and Baptists. To be deep in history is to cease to be a Post-Vatican-II Romanist.
H.T. to SDA pastor Bill Cork at Oak Leaves (link), for bringing the Pope's comments to my attention and to the philosophical blog Siris (link) for bringing the Papal admiralty fact to my attention.