Follow The Money
Never mind all the public outcry over rehabilitating reactionary holocaust deniers; none of that made the Pope reconsider. What finally did?
The statement was issued by the Vatican's Secretariat of State a day after German Chacellor Angela Merkel urged the pope to make a clearer rejection of Holocaust denials, saying there hadn't been adequate clarification from the Vatican.It just so happens that one of if not the main sources of revenue for the Church has been money from the German government, from people checking off "Catholic" so that the state gives some of their taxes to Rome. There may be more Lutherans in the country, but there are still a lot of folks who haven't followed the example of Petra Kelly and formally repudiated their affiliation with the Catholic Church.
One can easily imagine a campaign to deny such tax money to any church which doesn't repudiate and condemn the slaughter of Jews by the Nazis, and excommunicate anyone who denies that happened. The government there already restricts freedom of speech to deny the crime: cutting off the cash would be only a tiny step more. And so the ex-Hitler Youth member caves. But this is not new: they yielded to the temptation to earthly power and wealth at least seventeen centuries ago.