On the one hand, Fr. Fessio (of Ignatius Press/Ave Maria U.) in an interview on a radio talk show asserted that the Pope believes that Islam and democracy are incompatible. There is the most relevant portion of the interview excerpt:
JF: Well, the thesis that was proposed by Father Troll was that Islam can enter into the modern world if the Koran is reinterpreted by taking the specific legislation, and going back to the principles, and then adapting it to our times, especially with the dignity that we ascribe to women, which has come through Christianity, of course. And immediately, the Holy Father, in his beautiful calm but clear way, said well, there's a fundamental problem with that, because he said in the Islamic tradition God has given his word to Mohammed, but it's an eternal word. It's not Mohammed's word. It's there for eternity the way it is. There's no possibility of adapting it or interpreting it, whereas in Christianity, and Judaism, the dynamism's completely different, that God has worked through his creatures. And so, it is not just the word of God, it's the word of Isaiah, not just the word of God, but the word of Mark. He's used his human creatures, and inspired them to speak his word to the world, and therefore by establishing a Church in which he gives authority to his followers to carry on the tradition and interpret it, there's an inner logic to the Christian Bible, which permits it and requires it to be adapted and applied to new situations. I was... I mean, I wish I could say it as clearly and as beautifully as he did, but that's why he's pope and I'm not, okay? That's one of the reasons. One of others, but his seeing that distinction when the Koran, which is seen as something dropped out of heaven, which cannot be adapted or applied, even, and the Bible, which is a word of God that comes through a human community, it was stunning.
If it's left at that, the Pope would simply be one in a large group of people who believe that since Muslims view the Quran as God's Word, there's no way to reform the interpretation of it aside from the most literal. But as we all know, Benedict XVI isn't that easy and Magister goes on to point out that he consulted Samir Khalil Samir, "an Egyptian Jesuit and professor of Islamic studies at the Université Saint-Joseph in Beirut and at the Pontifical Oriental Institute in Rome." Fr. Samir was also at the September meeting and he told Magister that the Pope does believe it is possible to reconcile Islam and democracy.
According to this account, the pope sees a meeting between Islam and democracy as possible, but “on the condition of a radical reinterpretation of the Koran and of the very conception of divine revelation.”
Magister goes on to provide a large excerpt from The Salt of the Earth, one of the book-long interviews that Cardinal Ratzinger has done. In the excerpt, Cardinal Ratzinger talked about the global power of Islam as Christianity has faced its crisis in the West:
I think that first we must recognize that Islam is not a uniform thing. In fact, there is no single authority for all Muslims, and for this reason dialogue with Islam is always dialogue with certain groups. No one can speak for Islam as a whole; it has, as it were, no commonly regarded orthodoxy. And, to prescind from the schism between Sunnis and Shiites, it also exists in many varieties. There is a noble Islam, embodied, for example, by the King of Morocco, and there is also the extremist, terrorist Islam, which, again, one must not identify with Islam as a whole, which would do it an injustice.
So the Muslims now have the consciousness that in reality Islam has remained in the end as the more vigorous religion and that they have something to say to the world, indeed, are the essential religious force of the future. Before, the shariah and all those things had already left the scene, in a sense; now there is a new pride. Thus a new zest, a new intensity about wanting to live Islam has awakened. This is its great power: We have a moral message that has existed without interruption since the prophets, and we will tell the world how to live it, whereas the Christians certainly can't. We must naturally come to terms with this inner power of Islam, which fascinates even academic circles.
Cardinal Ratzinger specifically mentioned the King of Morocco and his 'noble Islam'. It is coincidental perhaps that just the other day, Father Jim at Dappled Things posted here a link to a Der Spiegel piece entitled Morocco's King Aims To Build a Modern Islamic Democracy.
Back in August, I wrote a bit about this in the context of the 'clash of civilizations' debate. The essay is in four parts: One, Two, Three and Four.