The pontiff also used his annual New Year's speech at the Vatican to diplomats to press concerns he had raised in his Christmas Day message: calling for an end to Syria's civil war and its growing death toll, including many innocent civilians.
He said he hopes Jerusalem will one day become "a city of peace and not of division."
Regarding Europe's economic crisis, the pontiff urged the EU to make "far-sighted" and "difficult" policy decisions favoring growth of the region as a whole.
"Alone, certain countries may perhaps advance more quickly, but together all will certainly go further," he said.
In addition to issues such as bond market yields and interest rates, world leaders should focus on "the increasing differences between those few who grow ever richer and the many who grow hopelessly poorer, " Benedict said, promoting the Catholic church's social teaching, which advocates special attention to the needy.
The financial crisis took root, he said, "because profit was all too often made absolute, to the detriment of labor, and because of unrestrained ventures in the financial areas of the economy, rather than attending to the real economy."
He urged people to resist the temptations for "short-term interests" at the expense of the common good.
Benedict also revisited one of his most pressing worries of late: the use of religion as a pretext for violence.
He said "baneful religious fanaticism" has produced many victims.
Repeating what he had said in his Christmas message, Christians in several parts of the globe have been the targets of such attacks, especially in Nigeria.