Statelet seeks to stimulate growth by yangxichun

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									MONACO
                                                                                                                                                                                                                       Royalty
                                                                                                                                                                                                                       Prince Albert is
                                                                                                                                                                                                                       moulding the
                                                                                                                                                                                                                       state according
                                                                                                                                                                                                                       to his beliefs
FINANCIAL TIMES SPECIAL REPORT | Wednesday September 29 2010                                                                                                                                                           Page 5
                                                                                                                                                                                                         www.ft.com/monaco­2010 | twitter.com/ftreports




Building up the waterfront: ‘Every 10 years, Monaco needs another three to five hectares. By 2020 we will have used up practically all our land,’ says Franck Biancheri, Monaco’s economic development minister                                       Dreamstime




Statelet seeks to stimulate growth
Peggy Hollinger explains                   ronmental awareness and plans to tre-      Mr Roger, it represents a slippery          not mean that Monaco is throwing          our estimates and by 2020 we will           will decide – as Monaco has no other
                                           ble overseas development aid to €30m       slope that threatens the very factors       open its doors to every start-up.         have used up practically all our land.”     option if it wants to preserve its
how the principality is                    by 2015.                                   that have made Monaco a success in            “It will not be Bill Gates when he        Monaco has two options to find the        cachet. Already the world’s most
now seeking to attract                        The principality, which had for so      the past: the cultural life that brings     was starting up in his garage who will    space it needs: either it builds up – as    densely populated state, new tower
                                           long fiercely defended the secrecy of      some of the world’s most famous art-        be encouraged to come,” says Pierre       is being done with the landmark             blocks would just increase the “feel-
entrepreneurs rather                       its banking system, has signed 24 tax      ists to its venues, high healthcare         André Chiappori, economics professor      Odeon Tower project. Or it reclaims         ing of suffocation” says one official.
than tax exiles                            agreements that have helped to get it      standards, and the security so impor-       at Columbia University in the US,         land from the sea, as Prince Albert’s          But, this being Monaco, no one is
                                           off the OECD’s blacklist. An Interna-      tant to Monaco’s wealthy residents.         whose views on Monaco’s future have       father did with an extension that           willing publicly to second-guess the
                                           tional Monetary Fund report in 2008          With one police officer for every 62      contributed to the government plan.       increased the size of Monaco by 23 per      prince, whose power is undeniable,



W
               hen Prince Albert II        praised “important steps” taken by         inhabitants Monaco claims to be one         “It is the creators, the innovators       cent in the 1960s.                          despite the democratic trappings of an
               announced his engage-       Monaco to reinforce the supervision of     of the safest places in the world, and      such as Kenzo [the fashion designer]        Prince Albert had his own project to      elected National Council.
               ment to South African       its financial sector, though it warned     that counts, says one billionaire who       who they should look for.”                extend Monaco by 20 hectares. But              Monaco’s ruler will take his time,
               former swimmer Char-        there was still more to be done.           has chosen to take up residence in the        Yet the big challenge will be to pro-   the €10bn extension was suspended in        say his advisers and he will not be
lene Wittstock, the small principality        Yet, the gradual demise of its tax      principality. “I can walk anywhere,”        vide the services this new population     2008, because of both the economic          rushed. Environmental concerns are
of Monaco let out a collective sigh of     haven status has presented Monaco          he says.                                    will need, housing and schooling for      crisis and Prince Albert’s concerns         important, yet much will also depend
relief.                                    with new domestic challenges. These          “If we don’t reduce the deficit, the      example. Already the statelet is run-     over the environmental consequences.        on whether the deficit is dealt with.
   Residents could hope for a continua-    are made even harder as the global         risk is decline,” Mr Roger says. “We        ning up against the limits imposed by       Close advisers say he will take a            Yet, just like its prince, Monaco
tion of the fairy tale that began in       economic crisis takes its toll on a        will no longer have the money to pay        its size. “Every 10 years, Monaco         decision in 2013 on a smaller less          seems ready to settle down and start a
1956, when Albert’s father, Rainier III    state of just 33,000 people, some 24,000   for the social system, we will have to      needs another three to five hectares,”    expensive extension project. Many           new life. All it needs to show now is a
wed Grace Kelly, the American              of whom are foreign residents.             cut back on our cultural spending.          says Mr Biancheri. “We have made          believe they already know what he           little commitment.
actress. After years of hesitation, the       Between 2008 and 2009, the princi-      What I absolutely want to do is to
couple’s 52 year old playboy son is        pality’s turnover tumbled from             avoid a descending spiral.”
finally ready to settle down.              €16.5bn to €13.2bn. Government               The government was this week pre-
   The implications for the tiny coun-     receipts have fallen from €897m to         paring to unveil measures to reinvig-
try of just 2 sq kms, squeezed between     €744m and, for the first time in years,    orate growth and to provide the foun-
the hills of France and the Mediterra-     Monaco is in deficit.                      dation for a new-look principality,
nean Sea, could be significant.               The principality, which derives         based on a road map set out by Prince
   “We are hoping the marriage will        some 50 per cent of its revenues from      Albert this year.
restore a bit of glamour to Monaco,”       value added tax (VAT), 13 per cent           The hope is that Monaco will be
says Jean-Yves Lorenzi, the Moné-          from property transactions and 3 per       able to attract a new type of resident,
gasque proprietor of the Roc estate        cent from financial services, has seen     one that plans to do more than retire
agents just a few steps from the           business in all three areas tumble, as     on the proceeds of past success. “We
Prince’s Palace. “And we hope it           the downturn hit even Monaco’s             believe that younger families are com-
might give the economy a boost.”           wealthy residents. Last year the state     ing to set up in Monaco,” says Franck
   Like many countries struggling to       suffered a €61m shortfall in its           Biancheri, Monaco’s economic devel-
find a way out of the current eco-         budget, and this will rise to €80m in      opment minister. “These are people
nomic gloom, Monaco is in the dol-         2010, with a deficit on the cards again    who want to come to exercise a pro-
drums and desperately needs the            next year.                                 fession.”
boost of confidence that a royal wed-         For some countries, an €80m short-        The initiative is the principality’s
ding can bring.                            fall would be insignificant, and for       latest attempt to be taken seriously as
   “Clearly, it will contribute to tour-   many Monaco residents it would             a state, and to be seen as more than
ism and strengthen interest in             hardly count as pocket money. But for      just a casino with a town and castle
Monaco,” says Michel Roger, the                                                       attached. “We are not a tax paradise,”
French civil servant appointed by                                                     says Mr Roger. “We are a real country
Prince Albert in March to lead his                                                    with a real state of law.”
government as minister of state, in                                                     Nonetheless, even Mr Roger admits
effect the prime minister.                                                            that Monaco will not abandon the
   Yet years before the global eco-                                                   easy tax regime that has drawn many
nomic crisis cast its shadow over the                                                 of the world’s richest to apply for resi-
world’s second smallest state, the                                                    dency. “Our model is not condemned
glamour had already begun to fade.                                                    to death, even if it has to evolve,” he
Decades of high-rise building had                                                     says. It remains one of the chief
taken their toll on the once elegant                                                  attractions of Monaco, even with the
seaside resort and Monaco was sus-          Inside this issue                         global drive towards transparency.
pected by its neighbours of harbour-        Tax A lack of agreement with its          “The world is open and we are in
ing tax evaders, drawn by the absence       neighbours leaves the state               competition,” he says.
of income tax and the highly confiden-      vulnerable to criticism even though it      The government’s plan is to encour-
tial nature of its banking system.          is no longer on the OECD blacklist of     age a younger population – but only
   Monaco’s transformation from play-       uncooperative tax havens, writes          those who promise to create wealth
ground for the rich and famous to a         Vanessa Houlder Page 2                    through innovation or services. “We
shady haven for tax evaders and                                                       want to favour entrepreneurs,” says
wealth of dubious origins was sealed        Sporting events They might                Mr Roger. “We want people who don’t
                                            bring in the crowds and give the
in 2004, when the OECD branded the                                                    come here to escape the taxman, but
                                            state an international profile, writes
principality uncooperative in the fight                                               who want to set up businesses. To do
                                            Roger Blitz but sporting events such
against fraud and money laundering.         as the Grand Prix are a drain on          that, we will have to improve the way
   In the five years since Prince Albert    resources Page 4                          we welcome new residents. We will
II came to the throne, he has worked                                                  have to simplify the procedures for
hard to change that image.                  Lifestyle Former resident                 creating companies and we will have
   In his accession speech, the prince      Paul Betts bemoans the constant           to modernise the legal framework for
promised his subjects their country         construction and cramped living           businesses.”
would become a model of ethics and          space but says life in Monaco still         The principality has always been
global citizenship. He has pledged to       has much to recommend it Page 5           choosy over who it allows to claim
cut emissions in the principality by 80                                               residency and new simplified meas-
per cent by 2050, campaigned for envi-                                                ures for certain types of resident do




Land of the rich faces
tough financial choices
                               John Maynard Keynes, the         includes a redevelopment of
Economy                        economist who advocated          the port, works on the old
                               spending one’s way out of        rail station, a new Yacht
Keynesian policies             recession.                       Club, tunnels to ease con-      Monaco train station
have led to a                    According to preliminary
                               figures, tax receipts fell 17
                                                                gestion, a new secondary
                                                                school and state housing.       on our public works”.
deficit, writes                per cent in 2009, leaving a         The public works in part       There are no income or
Scheherazade                   budget deficit of €61m –
                               albeit small change for
                                                                compensate for an indus-
                                                                trial sector that has suf-
                                                                                                inheritance taxes and busi-
                                                                                                ness taxes are low. Most
Daneshkhu                      some wealthier residents.        fered in the recession, lead-   government receipts from
                                 Sophie Thevenoux, the          ing to job losses – although    the services-oriented econ-
                               finance minister, says that      the country does not pub-       omy derive from value
For a country labelled a tax   30 per cent of last year’s       lish unemployment figures.      added tax, set at the French
haven and a magnet for         budget was spent on grands          Ms Thevenoux expects         rate of 19.6 per cent, and
millionaires, it may come as   travaux – large infrastruc-      the budget to be in deficit     from stamp duty on prop-
a surprise that Monaco’s       ture projects which she con-     again this year because         erty sales.
government has taken its       siders an investment rather      the    economic     recovery      These taxes account for
inspiration from economic      than a cost.                     is hesitant and “we have
policies propounded by           The schedule of activities     not wanted to slow down                 Continued on Page 2
2                                                                                                ★                                                                                                        FINANCIAL TIMES WEDNESDAY SEPTEMBER 29 2010




Monaco

Exclusive address
is still in demand
                                     most of the better blocks having      occupied by two banks. And
Property                             full access to concierge services,    security is important to the sort
                                     swimming pools and the all-           of reclusive wealthy buyer that
An apartment in                      important parking spaces for          is active in the principality.
Monte Carlo retains                  the fleets of luxury cars. Owners
                                     of the more luxurious properties
                                                                             There have been rumours cir-
                                                                           culating as to the identity of the
its attractions, writes              will probably have boats moored       buyer, with many believing it to
Daniel Thomas                        within walking distance.
                                        The prices partly reflect the
                                                                           be a member of one of the rul-
                                                                           ing families in the Middle East.
                                     tight supply of properties, with      If so, the buyer would not be



T
        he world’s most expen-       residence in the area seen            typical of the main buyers for
        sive sale of a private       almost as membership to an            properties in Monaco at the
        residence in September       exclusive club among the              moment.
        reinforced      Monaco’s     world’s wealthy.                        Agents report that the strong-
position as the top market for          Nick Candy, chief executive of     est demand originates from
luxury homes.                        Candy & Candy and a Monaco            Europe, including the UK, as
  Beating recent record deals in     resident, says the property mar-      well as the billionaires of Russia
London and Hong Kong, the            ket has never been stronger. He       and former Soviet states such as
sale for €240m of a vast apart-      declined to comment on the sale       Kazakhstan at the top end. How-
ment occupied by British prop-       of his brother’s flat, but did add:   ever, there is demand from all
erty entrepreneurs Nick and          “It’s hard not to love Monaco. It     parts of the world because of
Christian Candy – and owned by       has everything from good res-         Monaco’s tax haven status.
Christian – showed the allure of     taurants, shops, beautiful scen-        It became the most expensive
the stamping ground for the          ery and an abundance of style         residential property market in
world’s playboys in the Mediter-     and character. Not to mention         2009, according to the Citi Pri-
ranean remains untarnished.          that its geographical position        vate Bank and Knight Frank’s         La Belle Epoque: the Candy brothers spent more than £26m refurbishing the €240m appartment
  Monaco,     and     specifically   makes it the ideal base from          Wealth Report, overtaking Lon-
Monte Carlo, the harbour area,       which to conduct business             don with an average price for        Kensington Palace Gardens in           Land reclamation remains an      man, the property company, is       slow during the crisis and ven-
remain unique among the              across Europe.                        homes of more than £1m or            London.                              option, although it has proved     building a block of flats at 23     dors have not dropped prices, so
world’s property markets, with          “You can be sure that most         about €50,000 per sq m.                However, the Candy sale is         difficult. An extension was        Boulevard de Belgique.              there has not been much move-
the vast casino at its heart sur-    business men and women will             Prices for properties did drop     just the froth on the recovering     planned in front of the Fairmont     Markus Meijer, chief execu-       ment. A pick-up is expected in
rounded by blocks of flats,          be passing through. There is a        during the global slowdown in        market. Demand has emerged as        but was cancelled because of       tive of Meijer Bergman, says        2011 following increased demand
grand hotels and topped by the       shortage of supply of good qual-      house prices, however, and the       particularly strong for the          cost and environmental con-        this will be the only new supply    and a lack of supply.”
palace on the skyline.               ity properties coming on to the       level of transactions fell even      smaller – and more affordable –      cerns.                             when it is finished in 2011 until     While the Candy sale is
  La Belle Époque, the Candys’       market. Vendors can charge a          more sharply, as more turned to      properties, with studio and one-       The Tour Odeon is one of the     the Tour Odeon is completed.        unlikely to be replicated, the
former residence, is in a sense      premium and purchasers are            renting.                             bedroom apartments trading           few new developments, with         Sales of units will start in the    constrained supply and strong
typical of the sort of high-end      willing to pay a premium.”              Some properties on Avenue          between €1m and €3m.                 most building work focused on      next few months, with most          demand from the European
properties that trade in Monaco,        Although the penthouse has         Princesse Grace, a key marina-         The shortage of supply has         refurbishing or updating exist-    between 250 and 500 sq m.           wealthy and Middle Eastern and
with a history of the halcyon        just three bedrooms over two          front address, saw prices fall by    been exacerbated by a lack of        ing buildings. However, this         Mr Meijer says the sales mar-     Asian states is likely to con-
days of swinging Monte Carlo         floor, the buyer’s €240m secured      more than a quarter.                 new development, with tight          huge double skyscraper on the      ket is mainly “secondary stock      tinue to underpin a buoyant
but more recently better known       17,500 sq ft of prime Monte Carlo       This saw the road overtaken        restrictions on both where and       eastern side of Monaco will not    of an older generation and low-     market. The sunny principality
as the last home of Edmond           space with unsurpassed views.         in the global property agent’s       what to build, following worries     be finished for several years.     quality”, but that can still com-   with its tax advantages and
Safra, the financier.                   Just as crucial, says another      league tables by other addresses     over the architectural merits of     Most other developments are for    mand €20,000 a sq m without a       stunning views remains firmly
  Size is rarely as important as     source, the flat is secure – the      for prime property such as Sev-      the previous generations of high     rental units, such as Tour         sea view against €75,000 for the    on the tick box of accessories
location along the harbour, with     bottom levels of the building are     ern Road in Hong Kong and            rise apartments.                     Simona, although Meijer Berg-      best units: “Demand has been        for the world’s rich.




Move to more transparency                                                                                                                            Taxman peers into expat life
brings new set of problems                                                                                                                           Expatriates
                                                                                                                                                     Vanessa Houlder says
                                                                                                                                                                                        resident in France, particularly
                                                                                                                                                                                        if their spouse lives there or
                                                                                                                                                                                        their children go to school
                                                                                                                                                                                        there.
                                                                                                                                                                                                                            its guidance on residency rules.
                                                                                                                                                                                                                            In April 2008 it was made clear
                                                                                                                                                                                                                            that individuals had to make a
                                                                                                                                                                                                                            clean break when they left

                                     under scrutiny. The OECD, the         its good intentions can be meas-
                                                                                                                                                     new rules mean                        After the renegotiation of the
                                                                                                                                                                                        Anglo-French tax treaty,
                                                                                                                                                                                                                            Britain and it was not enough
                                                                                                                                                                                                                            to rely on “day-counting” to
Tax                                  author of the “uncooperative          ured by its deal with the US.                                             residents are looking              Britons living in Monaco with       stay outside the UK tax net.

A lack of agreement
                                     tax haven” tag, is about to pub-
                                     lish a peer review of Monaco’s
                                                                              Now that it has signed about
                                                                           two dozen tax information
                                                                                                                                                     over their shoulders               second homes in France need
                                                                                                                                                                                        to worry about this issue for
                                                                                                                                                                                                                               That has already changed
                                                                                                                                                                                                                            peoples’ attitudes according to
with neighbours leaves               legal and regulatory frame-
                                     works, in the first tranche of
                                                                           exchange agreements, it reckons
                                                                           it has done enough. But the          Angel Gurría, OECD
                                                                                                                                                                                        the first time. French property
                                                                                                                                                                                        taxes, which are calculated as
                                                                                                                                                                                                                            Stella Mitchell-Voisin, a
                                                                                                                                                                                                                            director of Close Summit Trust
the state vulnerable to              reviews into transparency and         omission of Italy – a country                                             When Sir Philip Green, a retail    a multiple of the property’s        Company who lives in Monaco:
criticism, writes                    information exchange.
                                        The report, by an interna-
                                                                           with important links to Monaco
                                                                           – is likely to raise eyebrows.
                                                                                                                fidential information by bank
                                                                                                                employees in Switzerland and
                                                                                                                                                     magnate, became an adviser to
                                                                                                                                                     the British government in
                                                                                                                                                                                        rental value, can be
                                                                                                                                                                                        substantial. Expat Britons, like
                                                                                                                                                                                                                            “The residency rules are the
                                                                                                                                                                                                                            hot issue for a lot of UK
Vanessa Houlder                      tional team chaired by France,           The decision to spurn a poten-    Liechtenstein has undermined         August, it sparked a political     other EU citizens, are pinning      people. They can’t be as free
                                     will be scrutinised during an         tial deal with Italy partly          confidence in offshore banks.        storm. Monaco, the home of his     their hopes on an anti-             and easy with popping in and
Monaco has long been branded         OECD meeting in Singapore.            stemmed from a concern that             Another impetus for more          wife, was at the centre of a       discrimination clause in the        out of the UK as they used to
an “uncooperative tax haven”         Similar reports will be produced      Italy would not remove Monag-        transparency is Prince Albert’s      stream of criticism about the      Treaty of Rome. Its efficacy is     be.”
by its bigger neighbours. But        for Bermuda, Botswana, the            esque companies from its black-      desire to shed the image as a        couple’s tax status. “My wife’s    being tested in a series of court      The Italian community in
the unflattering title was for-      Cayman Islands, India, Jamaica,       list. It was also eager not to       secretive tax haven. At his          not a tax exile,” he said in       cases, which could reach the        Monaco has also been affected
mally withdrawn 18 months ago        Panama and Qatar.                     begin negotiations while the         accession in 2005, he promised       their defence.                     Supreme Court next year.            by domestic tax developments.
after it bowed to pressure by           The review could be an             Italian government was offering      to put morality and probity at          The incident highlighted the       Another court case being         Italians rushed to take
declaring it was “ready to           uncomfortable experience for          its citizens an amnesty for unde-    the heart of Monaco’s policies.      incipient tensions in Monaco’s     closely followed by the British     advantage of the generous
increase its co-operation in the     Monaco, if it questions the thor-     clared money. It feared it would        Monaco has long argued that       relationships with its             contingent in Monaco concerns       terms of last year’s tax
fight against tax fraud”.            oughness with which it com-           create an uneven playing field       the tax haven tag is unfair.         neighbours.                        Robert Gaines-Cooper, a             amnesty – known as the scudo
   Monaco, like other paradis fis-   plied with OECD norms.                by striking a deal, while its        Even though it charges no               Higher-tax countries that       Seychelles-based entrepreneur       fiscale, or fiscal shield.
caux, was under attack from             It managed to vault on to the      rivals Switzerland and Luxem-        income tax – except for French       have seen some of their richest    who fled high taxes in Britain         Overall, the amnesty was
France, Germany and other big        OECD’s “whitelist” of jurisdic-       bourg held out.                      citizens who took up residence       citizens decamp to Monaco are      in 1976. He was recently            more successful than many
countries. Responding to bal-        tions that have substantially            Ensuring a level playing field    after 1957 – the territory is not    anxious; as a result, Monaco       granted leave to appeal to the      expected, generating €95bn
looning budget deficits, finan-      implemented the international         with Switzerland and Luxem-          tax-free. It charges 19.6 per cent   residents must be vigilant to      Supreme Court after a               ($129bn) of newly declared
cial crises and a string of high-    tax standard by quickly signing       bourg will also influence its        value added tax, stamp duty and      ensure they do not fall foul of    landmark defeat at the Court        assets. But Monaco only saw
profile evasion scandals, G20        a dozen “tax information              willingness to make concessions      other taxes. Companies face a 33     tax rules.                         of Appeal, which judged that        about €3.5bn out of the €75bn
leaders declared “the era of         exchange agreements”. These           to the European Union over           per cent tax on profits – unless        Take, for example, the issue    his social and domestic ties to     on deposit repatriated to Italy.
banking secrecy is over”.            were with small countries such        efforts to make the savings          they can demonstrate that            of second homes. Many people       the UK meant that he had               Karl von Bezing, a director of
   Welcoming           Monaco’s      as the Faroes, Liechtenstein and      directive a more effective tool in   three-quarters of company turn-      put up with cramped                never shed his status as a UK       Scorpio Partnership, a
announcement, Angel Gurría,          Andorra, as well as Sweden,           fighting tax evasion.                over is generated within the         accommodation in Monaco for        resident.                           consultancy, says Monaco, a
secretary-general of the Paris-      Australia and the US.                    Monaco’s long-standing reluc-     principality.                        its tax benefits but keep a           One Monaco lawyer says that      relatively small force in
based Organisation for Eco-             Monaco was acutely aware           tance to move faster than its           Monaco wants to promote           larger second home in France       even though well-advised            offshore banking, has had less
nomic Co-operation and Devel-        that it would face criticism for      rivals in abandoning banking         itself as a country where people     where they spend weekends.         Britons in Monaco have              of an impact from the Italian
opment, said meeting interna-        signing deals with other small        secrecy reflects the value placed    go to live, drawn by its benign         Cecile Acolas, from advisory    nothing to fear from the case,      amnesty than centres such as
tional standards was no longer       states that were accused of           on privacy by many of the seri-      climate, tight security, good        firm Moore Stephens, says tax      they are following it closely:      Lugano in Switzerland.
optional. “Governments require       being tax havens. But its choice      ously wealthy. This may not pri-     transport and cosmopolitan           issues surrounding second          “For most people, nothing new          “We have seen an exodus of
it, customers require it, and        of partners was determined by         marily be because they want to       atmosphere. But while the leni-      homes in France are important      has come out of the case. But       Italian people as a result of the
competitors require it.”             its desire to move quickly to         dodge tax so much as a fear that     ent tax regime is at the heart of    for Monaco residents. Those        people are asking: am I sure I      amnesty,” says Ms Mitchell-
   Monaco says it has done what      reach a dozen deals, the bench-       information could fall into          its offering, its image as a tax     lacking the protection of a tax    am doing the right things?”         Voisin. “But Monaco is still
it was asked to do. But its atti-    mark used by the OECD for the         unfriendly hands.                    haven is likely to be well nigh      treaty need to be vigilant to         Even before the Appeal Court     attracting a lot of people. It is
tude to tax evasion is again         whitelist. Monaco also argues            But the spate of leaks of con-    impossible to shift.                 ensure they do not become tax-     ruling, Britain had tightened       still booming.”




    Contributors
    Peggy Hollinger            Tom Griggs
                                                                 Land of the wealthy faced with difficult financial choices
    Paris Bureau Chief         Commissioning Editor
                                                                 Continued from Page 1           have a very special prop-        38,792 French and Italian       57 per cent       in 2008-09.     “We favour entrepreneurs     ness and run their company
    Paul Betts                 Steven Bird                                                       erty market in Monaco,”          daily commuters.                  However, the biggest fall     and their families. They can   from    here,”    says  Ms
    European Business          Designer                          75 per cent of receipts, of     says Ms Thevenoux.                 Monaco began measuring        in Monaco’s business turn-      have a certain way of life     Thevenoux.
    Correspondent                                                which the bulk is VAT.             “Last year, people did not    output based on GDP only        over was in banking and         here, security, an interna-      “Monaco does not wel-
                               Andy Mears
                                                                   Few properties changed        want to sell because offers      in 2007, but still produces     financial services which        tional education for their     come as residents people
    Vanessa Houlder            Picture Editor
    Tax Correspondent                                            hands last year, hitting        were too low.”                   figures for total business      tumbled by 50 per cent to       children and at the same       who defraud their tax
                                                                 the government’s tax take.         The recent sale of an unu-    turnover – €13.2bn in 2009,     €2.1bn.                         time, they bring their busi-   authorities,” she adds.
                               For advertising details:
    Roger Blitz                                                  Only 231 apartments were        sually large apartment for       a 20 per cent drop from           This industry mainly
                               Prakash Megha on:
    Leisure Industries         +33 1 53 76 82 51;
                                                                 sold, of which two were         €240m by Christian Candy,        2008. Trading – wholesale       manages wealth and the fall
    Correspondent                                                new-builds. This represents     the British property devel-      and retail – and hotels gen-    in revenues in part reflects
                               fax: +33 1 53 76 82 53;
                                                                 a sharp fall from the 417       oper, may signal a revival       erate 46 per cent of annual     low interest rates.
    Scheherazade Daneshkhu     prakash.megha@ft.com
                                                                 properties that changed         of the market.                   business.                         Ms Thevenoux denies
    Paris Correspondent                                          hands in 2008.                     Surrounded     on    three      Last year, these sectors      that Monaco has suffered
                               All FT Reports are available
    Daniel Thomas                                                  In general, someone who       sides by France and barely       fell 12 per cent compared       any negative fallout from
                               on FT.com. Go to
    Property Correspondent                                       owns a property in Monaco       7km from Italy, Monaco           with 2008, reflecting falling   having been declared an
                               ft.com/reports
                                                                 does not need to sell: “We      cannot be insulated from         demand.                         “uncooperative” tax haven
                                                                                                 the economic forces sweep-                                       by the Organisation of Eco-
                                                                                                 ing its neighbours, for all                     ‘Monaco does     nomic Co-operation and
                                                                                                 its haven status.                               not welcome      Development between 2002
                                                                                                    The French economy con-                      people who       and 2009.
                                                                                                 tracted by 2.5 per cent last                    defraud            The state was finally
                                                                                                 year and Italy’s by 5 per                       their tax        removed from the blacklist
                                                                                                 cent.                                           authorities’     of tax havens last year,
                                                                                                    Monaco has not yet pub-                                       after agreeing to increase
                                                                                                 lished 2009 national income                                      international co-operation
                                                                                                 figures, though initial esti-      The Société des Bains de      in fighting tax fraud.
                                                                                                 mates indicate a fall in         Mer, the state-controlled         Ms Thevenoux points out
                                                                                                 gross domestic product last      group that runs the princi-     that the tax information
                                                                                                 year compared with 2008.         pality’s casinos and several    agreements signed with
                                                                                                    In 2008, GDP was €4.49bn      of the leading hotels is a      other countries do not tar-
                                                                                                 – virtually unchanged from       traditional bellwether of the   get Monaco residents, but
                                                                                                 the previous year. Per cap-      impact of tourism on the        those who deposit money in
                                                                                                 ita GDP rose 2 per cent to       city-state.                     Monaco but are tax-resident
                                                                                                 €60,595, one of the highest        Revenues fell 6.5 per cent    elsewhere.
                                                                                                 in Europe.                       in the year to March 31,          To that extent, the tax co-
                                                                                                    Revenues are divided          hit by a fall in visitors       operation agreements have
                                                                                                 between 74,144 people, made      and fewer gamblers. The         not put off prospective resi-
                                                                                                 up of 35,352 residents –         average occupancy rate          dents, she says, nor have
                                                                                                 including just under 8,000       at its four plush hotels was    there been noticeable bank
                                                                                                 native Monégasques – and         50 per cent, down from          account closures.
4                                                                                                 ★                                                                                                                                         FINANCIAL TIMES WEDNESDAY SEPTEMBER 29 2010




Monaco

Grand Prix and other events are a drain on resources
                                     far removed from the deprived         grappling to restore success to a   ball’s   governing     body    is               Mr Keller, “we have to sell some                       “It’s normal for Mr Ecclestone                 known race event in the world,”
Sport                                surrounds of West Ham’s Upton         club, which in 2004 scaled the      demanding that clubs live                       players.”                                           to ask me for more money and                      Mr Boeri says.
                                     Park stadium as one could imag-       heights of Europe’s top competi-    within their means, a line                        Money worries are also a run-                     it’s normal that I’m crying,” he                     At the Monte Carlo Country
Roger Blitz says                     ine, Mr Keller tries to instil the    tion, the Uefa Champions            Monaco FC has pursued of its                    ning sore for Michel Boeri, the                     says.                                             Club, the ability to bring the
bringing top class                   same spirit of commitment to
                                     the principality’s young profes-
                                                                           League, reaching the final.
                                                                              But he must do so against
                                                                                                               own accord for several years.
                                                                                                                 It means that the club must
                                                                                                                                                               president of Auto Club de
                                                                                                                                                               Monaco. He has been responsi-
                                                                                                                                                                                                                      He winces about the 30 per
                                                                                                                                                                                                                   cent drop in advertising income,
                                                                                                                                                                                                                                                                     world’s top men’s tennis players
                                                                                                                                                                                                                                                                     gives organisers no qualms
sporting events to the               sional footballers.                   unusual financial restraints,       regularly cash in on the revered                ble for organising Monaco’s                         and the 15 per cent loss in                       about staging and retaining the
principality is an                     Nowhere offers a backdrop
                                     for top-class sport quite like
                                                                           considering Monaco’s wealth.
                                                                              With a small population to
                                                                                                               crop of young players it nur-                   showpiece sports event, the
                                                                                                                                                               Monte Carlo Grand Prix, since
                                                                                                                                                                                                                   grandstand receipts last year,
                                                                                                                                                                                                                   but says that he feels things are
                                                                                                                                                                                                                                                                     Monte Carlo Open.
                                                                                                                                                                                                                                                                        Rolex and Banque Nationale
expensive business                   Monaco.                               work with, Monaco attracts on                         ‘It’s normal for              1972.                                               starting to tick up again.                        de Paris are long-term sponsors,
                                       The football club’s stadium is      average just 10,000 fans to its                       Mr Ecclestone                   “The problem is the Grand                            But this is not a man who                      while ticket sales and TV view-
Marc Keller was coming to the        on the coast, Monte Carlo’s For-      18,500 seat stadium at the                            to ask me for                 Prix is a terrible waste of                         likes to focus on money, prefer-                  ing figures are positive, says
end of his professional football     mula One Grand Prix is raced          Fontvieille seaside district of                       more money                    money,” he says, as he sits in an                   ring to talk about the profile the                Eric Seigle, director.
career when in 1998 he was           through the winding streets of        the principality, and so gener-                       and it’s normal               ACM office cataloguing event                        event gives the principality.                        With 2,000 members, it is
transferred to West Ham United       the principality, and the Medi-       ates far lower revenue than top-                      that I’m crying’              costs.                                                 “It is a choice, he says. “You                 among the top five tennis clubs
in the rough, tough East End of      terranean twinkles while Fed-         flight French clubs.                                                                  “In Monte Carlo, with all the                     can’t do a Grand Prix cheaply.                    in France.
London, a signing by Harry Red-      erer and Nadal thrash tennis             Moreover, there is no largesse                                                   work you have to do to build the                    You have a lot of problems you                       The only question for its not-
knapp, the English club man-         balls in the Monte Carlo Open.        from the ruling Grimaldi family     tures out of its academy system.                track and the grandstands,                          don’t have in other sports, such                  for-profit association is whether
ager.                                  “It is a top area to live. You      to call upon.                         Winning France’s La Liga –                    when you take the balance of                        as security. You always have to                   it can expand without upsetting
  “Harry is from the East End,       have the security, the climate,          Prince Albert may love foot-     something it has achieved seven                 receipts and costs, you have a                      be thinking how to protect peo-                   the membership.
he taught me you have to be          you are in the centre of              ball, but the club is run by a      times – and qualifying for the                  very heavy loss in the millions                     ple. This has a cost.”                               There is no professional
committed to the club you’re         Europe,” says Mr Keller. “It’s        board headed by Étienne Franzi,     lucrative Champions League are                  of euros.”                                             As is the case for other Grand                 women’s tournament, nor a
playing for,” says Mr Keller.        difficult to leave. You have to       director-general of Compagnie       distant dreams.                                   Mr Boeri smiles ruefully when                     Prix host cities, Monaco’s gov-                   seniors event.
“West Ham is a special club, a       explain to players that Monaco        Monégasque de Banque, an Ital-        Last season, Monaco finished                  asked about the staging rights                      ernment compensates it for the                       “We are careful to make sure
historic club.”                      is built for the top. You have to     ian-owned bank based in the         a relatively lowly eighth in the                fees that Bernie Ecclestone,                        losses.                                           our members are comfortable
  On the hills of Monaco Foot-       have results.”                        principality.                       league.                                         the Formula One supremo,                               “To lose the Grand Prix would                  and have access to all facilities
ball Club’s training ground, as        Mr Keller is general manager,          In any case, European foot-        “We have to face reality,” says               demands.                                            be a big blow, it is the best                     easily,” says Mr Siegle.




Principality seeks fresh
sources of paying guests
                                 rious September afternoon,         At the Grimaldi Forum,        is better, up 28 per cent on   kets. That means challeng-
Tourism                          Michel Bouquier, president       Monaco’s convention-cum-        business tourism and con-      ing the perception that it is
                                 of Monaco’s tourism and          cultural    centre,    Sylvie   ventions, says Mr Bouquier     too expensive, something
Conferences and                  convention         authority,    Biancheri, its president, is    – though 80 per cent of        that puts off convention
emerging markets                 reveals a conversation he
                                 has had that morning with
                                                                  not short of funds to invest.
                                                                  The Grimaldi Forum has
                                                                                                  hotel activity comes from
                                                                                                  leisure visitors.
                                                                                                                                 organisers in particular.
                                                                                                                                   “That’s the impression
are target areas,                an influential Indian citi-      €50m for redesigning the          The Monaco Yacht Show,       that we’re fighting against,”
writes Roger Blitz               zen.
                                   “A friend of his is plan-
                                                                  hall and public access.
                                                                    But she says: If she could
                                                                                                  the Monte Carlo Interna-
                                                                                                  tional Television Festival,
                                                                                                                                 Mr Bouquier says. “They
                                                                                                                                 think they know Monaco,
                                 ning an Indian wedding in        ask Prince Albert for one       and leading conventions on     but actually they don’t



O
          ne big society         Monaco,” says Mr Bouquier.       wish, it would be for an        anti-ageing, insurance and     know Monaco.”
          wedding          in    “That will be the first of its   extra hotel.                    luxury packaging are main-       He reels off a story of how
          Monaco is defi-        kind.” The guest list will         “If you want to target the    stays, some of them regu-      he persuaded one sceptical
          nitely on next         number 1,000. “We’re talk-       very big conventions, you       lars for more than 50 years,   conference organiser to
year’s social calendar – but     ing high, high, high end.        need to be sure the availa-     even if some have cut back     make Monaco her first
there may be another.            We’re talking the highest        bility of all the hotels is     on their duration.             choice.
  The world knows about          quality possible.”               good,” she says.                  But Monaco is in competi-      Under       the      slogan
Prince Albert’s nuptials. In       Mr Bouquier’s problem –          The forum makes the           tion with other destinations   “Enchante-moi       Monaco”,
July, the ruler of the princi-   how to accommodate them          most of space – two-thirds      – with Singapore, Dubai        the tourism authority has
pality is marrying Charlene      – is a familiar one in           of its 7,500 sq m is under-     and Abu Dhabi in the lux-      since the downturn sought
Wittstock, a South African       Monaco, which has 11             ground – but its convention     ury resort market, Barce-      to woo leisure visitors with
swimmer.                         hotels providing 2,600 four      capacity is limited to 3,000.   lona, Berlin and several       price-conscious packages –
  Less well known is a cere-     and five-star rooms, and no        Monaco has taken its          other European cities for      spas, helicopter tours, cook-
mony pencilled in for            land for more. The Indian        share of recession pain.        business tourism – and the     ing demos, wine tasting,
March.                           wedding will fill up three       Hotel revenues fell 11 per      recession has the principal-   and the like.
  As he sips coffee on a glo-    hotels on its own.               cent last year, but this year   ity looking for new mar-         Attracting more price-
                                                                                                                                 conscious tourists is one of                        Historic waterfront: Monaco retains its allure for tourists                                                       Alamy
                                                                                                                                 the targets Monaco hopes to
                                                                                                                                 have achieved by 2013. It                              It is also small enough to              quier. “We cannot focus                  what Monaco is all about.
                                                                                                                                 also wants to set standards                         offer convention organisers                only on one segment; that                  “Our job in China as well
                                                                                                                                 in eco-tourism, make more                           banner promotions on pub-                  could be for nostalgic-only              as in India is to position
                                                                                                                                 out of big cultural and                             lic lamp posts. “We’ve got                 deluxe tourism for a few                 Monaco as the deluxe desti-
                                                                                                                                 sporting events and centres,                        many taglines,” says Mr                    people,” he says.                        nation, the most sophisti-
                                                                                                                                 such as its spring arts festi-                      Bouquier: “Need a venue?                     That is why the Oceano-                cated destination they can
                                                                                                                                 val and Oceanographic                               We offer you a country.”                   graphic Museum has staged                dream of,” says Mr Bou-
                                                                                                                                 Museum, and to improve                                 Ms      Biancheri     says              an exhibition of the contem-             quier.
                                                                                                                                 the quality of its welcome.                         because all the key individ-               porary British artist Dam-                 “So we’re not talking
                                                                                                                                   One tourism strength is                           uals involved in hospitality               ien Hirst, while the Nou-                about packages and rates,
                                                                                                                                 the geographical spread of                          and conventions are in such                veau Museum de Monaco                    we’re talking about experi-
                                                                                                                                 visitors. For example, its                          close contact, arranging a                 has just opened.                         ence, high quality experi-
                                                                                                                                 hotels pull in twice as many                        convention programme is                      Day visitors number up to              ence, about sophistication.
                                                                                                                                 Japanese and Australians                            easy, a factor becoming                    5m a year, but the big                     “We’re talking about
                                                                                                                                 as does the average four- or                        more important now that                    growth is in cruise passen-              really the highest you could
                                                                                                                                 five-star hotel on the                              the lead time for confer-                  ger numbers, expected to                 find.”
                                                                                                                                 French Riviera.                                     ences has come down so                     rise this year by 40 per cent              If Monaco does get to host
                                                                                                                                   It has 11 offices abroad,                         sharply. “It is more and                   to about 400,000.                        that prospective Indian
                                                                                                                                 including in Sydney, Tokyo,                         more last minute,” she                       At the same time, tapping              wedding      party,    those
                                                                                                                                 Moscow, New Delhi and                               says.                                      the emerging travel mar-                 wedding guests should be in
                                                                                                                                 New York. A São Paulo                                  Tourism in Monaco is a                  kets such as China and                   for the full deluxe treat-
                                                                                                                                 office opens in January.                            fine balance, says Mr Bou-                 India involves extolling                 ment.



                                                                                                                                 MONACO
                                                                                                                                       400 m                                                        BEAUSOLEIL                                       ROQUEBRUNE         Country information
                                                                                                                                                                                                                                                 Tenao                   Area                  1.95 sq km
                                                                                                                                                               Moneghetti
                                                                                                                                                                                                                                                          St-Roman       Languages        French, (official)
                                                                                                                                                                                            Station
                                                                                                                                                                                                                                                                              English, Italian, Monegasque
                                                                                                                                                                                                     MONACO                                          Sporting
                                                                                                                                                                                                                                                     Club
                                                                                                                                                                                                                                         Larvotto
                                                                                                                                                                                                                                                                         Currency               Euro (€)
                                                                                                                                                                                   La Condamine                                                                          Exchange rate:
                                                                                                                                  CAP                               Palace
                                                                                                                                  D’AIL                                                                                                                                  2009 average         1€ =$1.39
                                                                                                                                             Stadium                                         Port                 Monte                                                  Latest 2010 figure   1€ =$1.31
                                                                                                                                                                                                                  Carlo            200 km
                                                                                                                                                                                Monaco                                                                                   Population:      32,543 (2006)
                                                                                                                                               Fontvieille
                                                                                                                                                                                Town                                                                                     By age (%) Male Female Both
                                                                                                                                                                                                                                    FRANCE                   ITALY
                                                                                                                                                                                                           MEDITERRANEAN                  MONACO                         Up to 29     27.1 24.7 25.8
                                                                                                                                                   Heliport                                                     SEA
                                                                                                                                                                                                                                                                         30-59        41.3 39.7 40.5
                                                                                                                                   N




                                                                                                                                                                                                                                                                         Above 60     31.6 35.7 33.7

                                                                                                                                                        8 km                  L’Escarène                          Population density                                    Constitution
                                                                                                                                                                                                          ITALY
                                                                                                                                                                                                                  Population per sq. km (’000)                          Official name
                                                                                                                                                                       Contes
                                                                                                                                                                                                                  25                                                    The Principality of Monaco
                                                                                                                                          Carros         FRANCE                                  Menton                                                                 Major political parties
                                                                                                                                                                                           Roquebrune             20                                                    Union for Monaco (L’Union pour
                                                                                                                                                                       E80                      Cap Martin                                                              Monaco (UPM)), Rally and Issues
                                                                                                                                  Vence
                                                                                                                                                                               Eze      M O N ACO                 15                                                    for Monaco (Rassemblement et
                                                                                                                                                                           Beaulieu-sur-Mer                                                                             Enjeux pour Monaco (REM))
                                                                                                                                                       Nice                                          ur
                                                                                                                                  Cagnes-                          Villefranche-sur-Mer           Az              10
                                                                                                                                                                                                d'                                                                      Government
                                                                                                                                  sur-Mer                                                  t e-
                                                                                                                                                                    Cap Ferrat          Cô                         5                                                    Monaco has been a Constitutional
                                                                                                                                                                                                                                                                        Monarchy since 1911. The
                                                                                                                                                                                                                   0                                                    executive branch of government is
                                                                                                                                                                           MEDITERRANEAN SEA
                                                                                                                                                                                                                       1950 60      70      80      90 2000 10          under the supreme authority of the
                                                                                                                                                                                                                                                                        Crown Prince and enforced by a
                                                                                                                                 Top 10 eurozone countries                                           GDP growth                                                         Minister of State. The Minister of
                                                                                                                                                                                                     Annual % change                                                    State (Prime Minister equivalent)
                                                                                                                                 by GDP per capita 2008 ($’000)                                                                                                         presides over a Council of
                                                                                                                                                                                                     15                                                                 Government. The five Government
                                                                                                                                  Monaco                                                                                                                                Counsellors are each responsible
                                                                                                                                                                                                                                                         Monaco         for an area of government policy,
                                                                                                                                  Luxembourg                                                                                                                            respectively Finances and the
                                                                                                                                                                                                                                                                        Economy, the Interior, Public
                                                                                                                                  Ireland                                                            10
                                                                                                                                                                                                                                                                        Works, Social Affairs and External
                                                                                                                                  Netherlands                                                                                                                           Relations. The Minister of State
                                                                                                                                                                                                                                                                        and the Government Councillors
                                                                                                                                  Finland                                                                                                                               are appointed by and accountable
                                                                                                                                                                                                      5                                                                 to the Prince
                                                                                                                                  Austria                                                                                                                               Head of State
                                                                                                                                                                                                                                                                        His Serene Highness,
                                                                                                                                  Belgium                                                                                                                               Prince Albert II of Monaco
                                                                                                                                  France                                                              0                                                                 Prime Minister equivalent
                                                                                                                                                                                                                                                                        SEM Jean-Paul Proust,
                                                                                                                                  Germany                                                                                                                               Ministre d’Etat since June 2005
                                                                                                                                                                                                                                Europe                                  Foreign Minister equivalent
                                                                                                                                  Italy                                                                                                                                 S.E. Mr Jean Pastorelli, Conseiller
                                                                                                                                                                                                     -5
                                                                                                                                                                                                                                                                        de Gouvernement pour les
                                                                                                                                                   0          50        100       150       200           1980    85       90        95          2000       05    08    Relations Extérieurs
                                                                                                                                 Sources: UN; US Census Bureau; Foreign & Commonwealth Office
FINANCIAL TIMES WEDNESDAY SEPTEMBER 29 2010                                                      ★                                                                                                                                                             5




                                                                                                                                                                                                                                     Monaco

Balmy and safe but also noisy, expensive and cramped
                                     is also a series of contradictions.   I have known it, certain things     such an affluent population put      in the principality can lunch at        Indeed, many residents feel it    street markets that nonetheless
Lifestyle                               On the one hand there is the       have not.                           up with the perpetual noise of       the beach and return to their         is one of the rare places in the    have to struggle against the
                                     glamour and glitz of its million-       It used to be very pretty. But    drilling and building, huge traf-    offices after a swim. Tax exiles      world where they feel safe          competition of Carrefour and
Former resident                      aire residents – tax exiles for the   the building boom has trans-        fic jams at rush hours, not to       can update their portfolios sit-      enough to walk around with          other supermarkets.
Paul Betts looks at the              most part – with their yachts
                                     crammed into the two harbours.
                                                                           formed it into a mini Manhattan
                                                                           on the Mediterranean, destroy-
                                                                                                               mention the high cost of buying
                                                                                                               or renting a flat?
                                                                                                                                                    ting on their balconies or yachts
                                                                                                                                                    and tapping on their computers.
                                                                                                                                                                                          their jewels and Rolex watches.
                                                                                                                                                                                          And then, many residents also
                                                                                                                                                                                                                                But for all its advantages,
                                                                                                                                                                                                                              Monaco still needs to make a
pros and cons of living              There are also the grand hotels,      ing many of the old villas and         The answer is that they get         Monaco has always had good          tend, as they have always done,     big effort to ensure a viable bal-
in the Principality                  the casino, the summer Sporting
                                     festival with its gala nights and
                                                                           replacing them with a jungle of
                                                                           ugly skyscrapers. A paradise for
                                                                                                               used to it and that they proba-
                                                                                                               bly think the advantages of liv-
                                                                                                                                                    leisure and sporting facilities.
                                                                                                                                                    The tennis country club is a
                                                                                                                                                                                          to use Monaco as a base.
                                                                                                                                                                                            They can escape from the
                                                                                                                                                                                                                              ance between its ongoing prop-
                                                                                                                                                                                                                              erty development – this is, after
                                     fireworks that set Monaco’s           construction companies and                                               haven. The golf club high above       noise and dust of the incessant     all, one of its prime sources of
It is easy to caricature the Prin-   large    population      of   well-   property developers, the princi-                       Those with        sits in a spectacular setting.        building works in the hills         income these days – and main-
cipality of Monaco. Where else       groomed dogs howling.                 pality was expanded seawards                           yachts or boats     The beach club has sadly been       behind – the so-called arrière      taining a good quality of life.
do you ring for a cab and a             And then, on the other hand,       via large landfill developments.                       simply go to      expanded too much, but it             pays – which in parts is still        The Prince and his govern-
black Bentley with a taxi sign       there is a perfectly normal and       The old railway and the station                        sea for the day   seems people are still prepared       quite wild and beautiful.           ment need to tread carefully. In
on the roof rolls up? Where else     on the whole happy population         are now buried underground to                          to avoid the      to pay an extravagant entrance          Other residents also own vil-     an age when tax havens are
do you have such a concentra-        of local Monégasques and some         make way for new roads and                             crowds and the    fee to be squeezed like sardines      las along the coast they use as     increasingly      under     siege,
tion of wealth in a country no       30,000 people who commute             more building land.                                    incessant noise   around the big swimming pool.         second residences to take refuge    Monaco will have to show it
bigger than Hyde Park in Lon-        every day to work in the banks,         A huge new jetty built in                                                In any case, those with yachts      from the din of the principality.   continues to have more to offer
don? Where else do you have a        the shops, the hotels and cafés.      Spain and brought by sea has        ing there outweigh the disad-        or boats simply go out at sea for       Even when you live in             than its friendly fiscal system.
daily changing of the guard cer-        I have always had a soft spot      made it easy for giant cruise       vantages.                            the day to avoid the crowds.          Monaco, you often hear in the         And that does not only imply
emony outside the sovereign          for the place. I first came to live   ships to dock in Monaco. The          There is, of course, no income       The other advantage is that         morning, apart from the traffic,    efficient services and leisure
prince’s palace involving a tiny     in the principality with my par-      recent downturn and financial       tax. But the high price of prop-     Monaco has all the facilities of a    a cock crowing in the back yard     facilities, smart hotels and good
handful of soldiers?                 ents in 1956 after we had to          crisis does not seem to have        erty is in a sense the equivalent    big country and in many cases         of a small house in the neigh-      restaurants, but a careful moni-
   Ruritania, perhaps?               leave Egypt as a result of the        stopped the permanent con-          of a tax, although you do not        far better – hospital and special-    bouring French town of Beau-        toring of its own environment.
   Indeed, if Monaco did not         Suez crisis. My aged mother still     struction activity with all its     have to bother with filling bor-     ised medical centres, schools         soleil.                               There is an obvious limit to
exist, you would probably have       lives there. And although this        noise and traffic congestion.       ing tax returns. Then there is       and so on. It is also a pretty safe     There are still one or two cor-   how much construction noise
to invent it. Yet for all its opu-   minuscule country has greatly           This is the other big paradox     the Riviera weather. The bank-       place with extremely tight            ners that have retained a Prov-     and disruption residents can
lent quirkiness, the principality    changed during the half century       of Monaco. Why and how does         ers and businessmen who reside       police security.                      ençal atmosphere, especially the    take.




Modern monarch is
sticking to principles
                                            his father’s death, he made clear right    He has taken part in two Paris-Dakar
Profile                                     from the start that he intended to         desert rally races. And he strongly
                                            continue to rule in the tradition of his   believes that sport is part and parcel
Paul Betts examines how                     father and his ancestors.                  of his country’s economic model.
Prince Albert is moulding                     At the same time, he has also
                                            stamped his own vision and personal-
                                                                                          After all, Monaco is famous for its
                                                                                       car rally, its Formula One Grand Prix,
the principality according                  ity with a very relaxed and plain          its international tennis tournament,
to his interests and beliefs                speaking attitude for a sovereign head
                                            of state.
                                                                                       its sailing competitions, the profes-
                                                                                       sional soccer team that plays in the
                                              Prince Albert is a modern-day cos-       French premier league, and so on.



I
      was once asked to introduce           mopolitan monarch. He is part Ameri-       Prince Albert even persuaded the
      Prince Albert of Monaco who           can and part Irish. He went to school      Tour de France to start in the princi-
      had kindly agreed to be the guest     in Monaco and then to Amherst Col-         pality two years ago.
      speaker at a Parisian lunch           lege in Massachusetts where he grad-          Like his great-great grandfather
organised by the Financial Times and        uated in political sciences.               Prince Albert 1, he is a committed
Moët Hennessy. His entourage told             He did a stint on Wall Street at         explorer and protector of the environ-
me I could say practically anything,        Morgan Guarantee Trust to get a han-       ment, especially marine life. One of
but – please, please – avoid the one        dle on international finance and then      the first things he did soon after
issue that irritates the Prince more        at Moët & Chandon, the champagne           becoming monarch was to travel to
than anything else, his private and         house, to learn how to manage a            the Norwegian island of Spitsbergen
sentimental life and especially when        brand. For Monaco, his late father         in the Arctic Ocean in the footsteps of
and if he intended finally to get mar-      also believed, was a particularly          his great-great grandfather.
ried.                                                                                     The following year he took part in
   A year later, the subject is no longer                                              an Artic expedition, becoming the
taboo. Prince Albert this summer for-       A fairy tale wedding will                  first head of state to reach the North
mally announced his engagement to           be a glamorous way of                      Pole on Easter Day 2006. Last year, he
the South African former swimmer                                                       spent a month in the Antarctic, visit-
Charlene Wittstock. The marriage will       reviving international                     ing scientific research centres to learn
take place early next July and the
principality is already gearing itself
                                            attention on his tiny and                  more about climate change and its
                                                                                       impact.
up for a glamorous international            intriguing country                            One of his pet ventures is his foun-
event that is expected to give the tiny                                                dation to finance Monaco’s efforts in
Mediterranean state a huge boost in                                                    supporting sustainable and ethical
difficult times.                            strong brand that nonetheless needed       projects around the world.
   Not only does the royal wedding          to be developed continually.                  But the past few years have been
remove all the old worries about the          Since taking over, Prince Albert has     particularly challenging. The global
eventual succession if the 52-year-old      sought to do just that, in his own         financial crisis has hit its core eco-
prince had remained a happy go lucky        way. In one of his first speeches after    nomic sectors, including tourism, the
bachelor. But many hope it will have        succeeding his father, he acknowl-         property market and banking. Worse,
the same effect in putting the spot-        edged Monaco was a tiny state. But         the principality has found itself
light once again on Monaco, its attrac-     that did not prevent it from having        caught in the campaign by its much
tions and its potential, as spectacu-       international       ambitions      and     bigger neighbours and members of the
larly did Prince Rainier’s marriage to      “dreams”. Prince Albert has sought to      G20 group of leading countries to          Royal wedding: Prince Albert and Charlene Wittstock are to marry in 2011                                                  Getty
the actress Grace Kelly in 1956.            enlarge his country’s voice and stand-     clamp down on tax evasion and bank-
   Taking over from his father was          ing in two areas he is passionately        ing secrecy.                               stamp state more seriously. In so          and disappointed. However, the             much needed fresh boost to consoli-
never going to be easy. Prince Rainier      engaged in – sport and protection of          The Prince has made it clear he is      doing, he has also shown he can take       Prince felt that the project did not       date its economic future in complex
in his extremely long reign trans-          the environment.                           committed to financial transparency        difficult and unpopular decisions.         meet his strict environmental stand-       and changing times.
formed and modernised the principal-          He has always been a keen all-           and adapting the country and its             In particular, he decided to suspend     ards and that in any case it was not         By announcing instead his forth-
ity and extended its territory by 20        round sportsman. He has been a mem-        financial system to international          indefinitely a plan to expand his terri-   the moment to embark on such a             coming fairy tale wedding, the Prince
per cent by landfills into the sea.         ber of the International Olympic Com-      rules. And just like his late father, he   tory even further with a new penin-        risky and expensive project.               may have opted for a simpler and far
   True, Prince Albert had long been        mittee for more than two decades. He       is keen to shed the principality’s tra-    sula that would have jutted into the          Promoters of the now aborted land-      more glamorous way of reviving inter-
carefully groomed for the role. And         has competed in several Olympics           ditionally frivolous image and per-        sea near the old harbour’s entrance.       fill design still argue that the project   national attention on his tiny and
when he was enthroned in 2005 after         leading his country’s bobsleigh team.      suade the world to take his postage          Property developers were put out         would have given the principality a        intriguing country.




A tough run of luck at the casino
                                for just over half of group      through its partnership         months to June 30.               more attractive,” counters
Profile                         turnover: “The fall in           with Mangas: “You can              However, gambling             Mr Biamonti, before saying
                                gaming activities is a           play for profitability or you   revenues continued to fall,      that the group’s
Société des                     direct consequence of a          can play for market share.      dropping 26 per cent             performance is “more
Bains de Mer                    deterioration in the             Our strategy is to generate     compared with the                conjunctural than
                                economic environment.            cash flow to reinvest in        previous year. Group             structural”.
Profits are down at             People gamble more when          acquisitions and market         revenues fell 11 per cent to        “It’s up to us to improve
                                the money is easy.”              share gains. So we are not      €88m in the first quarter.       the offer,” he adds.
the gaming group,                  The group’s opulent but       looking for immediate              Mr Biamonti dismisses            To that end, the
says Scheherazade               only half-full hotels also       profit but rather for long-     suggestions that Monaco’s        company is keeping a close
                                acted as a drag on               term value.”                    glamorous heyday is over,        eye on introducing new
Daneshkhu                       profitability, with an              Mr Biamonti says the         with a knock-on effect on        card games, since Asian
                                operating loss of €4.7m in       company also suffered last      its main businesses.             players – still only a tiny
                                2009-10, against a €7.4m         year from Monaco’s late            A recent report on the        part of the clientele but
Société des Bains de Mer        profit the year before.          introduction of a ban on        principality in L’Express, a     expected to be important
may have a monopoly on             In part this was due to a     smoking in public places.       French weekly, echoed an         in the future – prefer cards
casinos in the playboys’        refurbishment programme          Smoker gamblers had             oft-repeated sentiment that      to roulette.
playground, but this            including €48m spent on          flocked to its casinos to       Prince Albert lacks the             It is also introducing
advantage has not               the stately Hotel                escape the ban in France        allure of his glamorous          new versions of poker – a
prevented revenues and          Hermitage.                       and Italy but Monaco lost       parents, Prince Rainer and       game that 10 years ago
net profits from plunging          SBM also renovated its        its competitive advantage       Grace Kelly, and that            could be played only in
over the past two years.        1930s waterfront hotel, the      once it too followed suit in    sports and business              private clubs – and
  In addition to its casinos,   Monte Carlo Beach, and           November 2008.                  personalities have replaced      building an extension to
the company runs most of        opened the Buddha Bar, a            The gaming business          film stars and models.           the terrace at its main
the principality’s luxury       restaurant and bar aimed         made an operating profit of     These days, it said, you are     casino for gamblers who
hotels and is one of its        at attracting Asian visitors.    €26.7m in 2009-10, even if      more likely to see Eddy          want to smoke.
biggest employers.                 Total investment rose to      this was less than half that    Merckx, the veteran                 The company believes
  As such, it is an             €199.3m in 2009-10, against      achieved in 2007-08.            Belgian cyclist, than            Monaco’s good weather
important bellwether of the     €35.4m the year before, but         The group expects            supermodel Claudia               compared with Paris or
city-state’s economic           €140m of this represented        this year to be “difficult”     Schiffer on Monaco’s             London should give its
fortunes. Indeed the state      its stake in Mangas              too, although the hotel         beaches.                         casino a further
owns 70 per cent of its         Gaming. SBM took a 50 per        sector appears to have             “I honestly think Monaco      competitive advantage.
shares, which are quoted        cent stake in the online         bounced back after the          is becoming more and                Finally, online gambling
on the NYSE Euronext            gaming group in 2009             group reported a                                                 is “in its infancy”, says Mr
stock exchange.                 alongside entrepreneur           10 per cent rise                             The place to        Biamonti but will grow
  Revenues fell by 6.5 per      Stéphane Courbit, its            in revenues in                               gamble away         quickly. He points out that
cent in the year to March       founder. Mangas made a           the three                                    your money          in return for its gambling
31 2010 to €374.1m. Net         €8.6m loss in 2009-10,                                                        in style            monopoly, SBM pays
profit nosedived from           linked to charges for a                                                                           royalties and sponsors
€40.6m in 2008-09 to €1.1m      series of acquisitions,                                                                           sports and cultural events.
and €93.5m the previous         including Betclick, Expekt                                                                        He hopes the state will
year.                           and Everest Poker, and                                                                            renew the monopoly
  Jean-Luc Biamonti,            asset depreciations.                                                                               conceded in 1863, as it has
chairman, says the                 Online gambling was                                                                              done up to now. But as
company has been hit by         legalised in France this                                                                            the renewal date is a still-
the economic crisis,            year and Mr Biamonti                                                                               distant 2027, SBM has
particularly in its gambling    says SBM wants to grow                                                                              much to occupy it until
activities, which account       quickly in this area                                                                                then.

								
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