DATELINE: MONACO

The fading of a fairy tale

Marci McDonald September 12 1983
DATELINE: MONACO

The fading of a fairy tale

Marci McDonald September 12 1983

The fading of a fairy tale

DATELINE: MONACO

Marci McDonald

On Mount Agel, where Princess Grace of Monaco began her fatal drive last September, a sombre storm cloud shrouds the transmitters of Radio Monte Carlo. Below, the road unravels in heart-stopping hairpin twists down to the blithe, sun-drenched 469-acre principality over which she reigned.

In the year since 52-year-old Grace Patricia Kelly of Philadelphia and Hollywood was laid to rest, life in Monaco

has resumed. The question now confronting the royal family is whether it will ever be the same without her. Like the storm cloud over Mount Agel, dark economic forecasts have suddenly threatened the principality’s smug sense of paradise.

When Princess Grace’s death turned the international spotlight on the Mediterranean rock of the Grimaldi family, it revealed shaky foundations—a moribund real estate market, enfeebled casino re-

ceipts, an economy dependent on tourism’s fickle whims and a future stunted by lack of land and long-term planning. The headlines had become so gloomy that Prince Rainier III, 60, emerged from his mourning this spring to attack insinuations that his consort’s death had even cost Monaco its international social pull. Said Rainier: “I found it insulting for me and for the children. It meant that we do not count. The princess was a great asset and a formidable ambassadress. Anyone would prefer her smile to mine. But they must have for-

gotten that the principality has existed for 800 years.”

To counter speculation that only she could attract the glitterati, the palace enlisted her old friend Frank Sinatra to sing at the Red Cross Ball on Aug. 5. And royal spokesman Nadia Lacoste repeatedly insists that “the princess had

nothing to do with the

politics or the economy.” But an increasing number of observers have continued to question whether, with Princess Grace gone, Monaco can

lure the wealth it needs to sell off the high-priced apartments now disfiguring its skyline and to fill the deluxe hotels and casinos that keep its population of 27,000 afloat.

In the baroque interior of the government-owned Casino, croupiers hover like museum guards over the near empty gaming salons. The grand dukes, who once came with their strongboxes for the season, have disappeared, as have the Citroën automobile heirs who tossed 1,000-franc chips across the chemin de fer tables. The petrodollar sheiks have moved down the coast to Cannes. And this season tourists prefer the slot machines stuck garishly in the Casino’s entrance hall or the Las Vegasstyle hoopla of Loew’s Monte Carlo, a U.S. hotel and casino. In the past 12 months the government’s profits on gambling were modest at best, prompting Prince Louis de Polignac, Rainier’s cousin, to apologize to the Casino’s private shareholders for not increasing the dividend last year. He also noted that the principality’s traditional European clientele was on the wane and that Monaco, while retaining the patina of its gilt-edged legend, had better make some adjustments to keep up with the times.

The Grimaldis have long been embarrassed by their gambling base, which once prompted Queen Victoria to draw the curtains of her private train when it rumbled through “the capital of sin.” The gaming monopoly is thinly disguised by a corporate euphemism, the Société des Bains de Mer (SBM)—the sea-bathing society—in which the state holds 70 per cent of the shares. Palace spokesmen are all too eager to note that, thanks to Rainier’s farsighted business sense, the casinos now account for only four per cent of the government’s yearly budget. The largest source of revenue is tourism. But, in fact, the SBM, with its three hotels, 18 restaurants, four nightclubs and assorted leisure outlets, with 2,000 people on its payroll remains Monaco’s largest employer after the state. More importantly, the casinos provide the main drawing card for the tourist industry, on which the economy rests. For that reason, the SBM’s 1982 annual report sent tremors through the principality. It revealed that, despite an $ll-million increase in gambling receipts, profits fell by one-third over the past five years.

Residential real estate construction, which Rainier hoped would lure more wealth to his principality, is also in a slump. The soaring U.S. dollar, high interest rates and the election of a Socialist government in France, of which Monaco is a protectorate, have driven investors elsewhere. A recent report by Monaco’s real estate board noted that in

1982 only 82 apartment units were sold—compared to the situation in the 1970s, when several thousand changed hands. Since real estate transactions represent 36 per cent of the country’s business—and the state reaps onequarter of its revenues from the valueadded tax on such transactions—the slump has been a serious blow. Nor have rentals taken up the slack. Noted one real estate agent: “There is an enormous amount of material on the market to move. People have a wait-and-see attitude.”

Real estate people charge that the Socialists’ 1981 victory in France has frightened off the rich, who are looking for tax shelters. The potential investors were often already fleeing Socialist share-the-wealth politics in their native countries and recoiled at the prospect of the Bank of France controlling all currency transfers to and from Monaco. Noted one real estate agent: “People have no faith at all in the French government and they think we have not seen the worst yet. Everyone feels the instability.” Indeed, in the villa garden of Jack Evans, a British businessman who moved to Monaco three years ago seeking refuge from taxes, there is even hysterical talk, over the inevitable 6 p.m. champagne, that French President François Mitterrand could still march in his troops to “colonize their money.” Still others blame Rainier’s own policy of overbuilding, which has over the past decade transformed Monte Carlo, Monaco’s capital, from a languid resort city into a noisy concrete jungle.

During the boom years of the 1970s real estate values rose by 25 per cent a year until 1980, which, given the scarcity of land, turned Monaco into one of the world’s most expensive markets. Traffic jams are now so irksome that the government plans to tear down the fabled Café de Paris to build a 500-space underground car park. There is so little vacant land remaining that in order to build a developer must now begin by demolishing an existing building. Noted Raoul Boni, president of the real estate board: “We are ingenious people. We always find an old villa to tear down.”

Tourism, which accounts for 55 per cent of the country’s GNP, is the principality’s only industry that recorded growth last year. In 1982, 10,000 more visitors booked into Monaco’s 2,200 hotel rooms—all four-star or deluxe to discourage the riffraff—than in 1981. So far this year, bookings are up about 10 per cent.

Still, tourism is a fragile economic base, as even Rainier has admitted. This was clearly proven two years ago when the U.S. dollar plummeted and Americans, who had accounted for 36 per cent

of Monaco’s vacationers and provided the main source of tourism revenues, suddenly stayed home. Twenty-one per cent of those Americans trickled back last year, and a massive publicity campaign based on the dollar’s muscle is now aimed at wooing the rest. Ads trumpet Monaco as “A dream you can afford,” with the subtitle, “Of all the world’s principal resorts, there is only one principality.” One illustration features the peach-sandstone castle with the changing of the guard at the candystriped sentry box. There is, of course, no mention of Princess Grace. At least not explicitly. Explained Louis Blanchi, Monaco’s director of tourism: “The competition is stiff. We have to play our best card.” But talk of just how much Grace’s death will affect the country’s drawing power clearly makes its civil servants uneasy. Said Blanchi: “She did an enormous amount for the prestige of Monaco. It is a great tragedy which has hit us. It is always delicate to talk about that.”

Privately, residents express doubts about whether the weary Rainier, whom his late wife christened “the bear” because of his social discomfort, can fill the gap. There is also doubt that Princess Caroline, 26, the headstrong beauty best known for her short-lived 1978 marriage to French playboy Philippe Junot, can serve as an adequate substitute—even if she marries her longtime suitor, Robertino Rossellini, 33, Ingrid Bergman’s handsome son.

The principality that Albert will inherit when he and his father decide that he is ready to take over will be vastly different from the one to which Grace Kelly came in 1956. Rainier’s critics argue that in rushing to diversify Monaco’s revenue base and exploit every square foot of rock, the prince has exhausted its land and resources for the future. For their part, government technocrats concede that there are no longterm plans to be implemented in two years time, when workmen are scheduled to complete the 18-acre Fontvieille landfill development project below the palace walls. Shrugs Monaco’s budget director, Jean Pastorelli: “Something always comes along.”

Meanwhile, Monaco stands uncertainly at a crossroad, weakened by poor prospects and a national sense of loss. André Saint-Mieux, the urbane director of the Société des Bains de Mer, prefers to put it more poetically. “Princess Grace represented an epoch,” he said. “The luck for Monaco was that she died in the flower of her youth and beauty. She gave us an immortal princess, a legend that would never fade. In a sense, it was the supreme gift she gave to Monte Carlo.”