The tiny hereditary principality of Monaco on the French Riviera/Côte d’Azur has long-held a reputation for being a playground of the rich and famous (thanks to its high cost of living and its tax laws)✱, in addition to being a micro-state with a high-profile royal family (The Grimaldis) whose capacity to attract publicity is grotesquely way out of proportion to the entity’s minuscule size and insignificant political importance. Monaco is also famous for its industries – gambling⊞ , banking and tax avoidance. It is this last area of finance that was the crux of a brief 1960s confrontational episode in the country’s historical relations with its larger regional neighbours.

Hercule Harbour, Monaco

In October 1962 the French government of Charles De Gaulle imposed a blockage of Monaco’s main port. The prospect of an advanced Western European power threatening a tiny territorial enclave – possessing a microscopic gendarmerie and no army or navy – with force must have struck outsiders as a farcical situation…in reality the blockade stayed in place ever so briefly although it was not officially lifted until Easter 1963. The Franco-Monégaseque ‘Crisis’ was completely in the shadow of the terrifyingly real crisis occurring in Cuba at the same time, the international missile crisis standoff between the global Cold Warriors, USA and the Soviet Union [Fabien Hassan, ‘Lessons from history – The Monaco crisis from 1962-1963 and the emancipation of tax havens’Finance Watch, 27-Apr-2015, www.finance-watch.org].

The nub of the conflict
Monaco’s historical practice of not imposing any direct income tax on its residents (including those migrating to the Principality from France) and having minimal taxes on business had a deleterious outcome for France – a significant loss of revenue for the French coffers. In this regard De Gaulle had a legitimate gripe against Monaco for letting wealthy French persons evade their tax obligations to the Tricolore Republic…this was especially galling to the French President as it was France that footed the entire bill for tiny Monaco’s national defence (plus forking out some other financial outlays as part of the two nations’ special relationship). At the time the French media was stridently doing its utmost to drum up national disaffection with the Monaco situation⊛.

⍍ Grace Kelly’s 1955 Hitchcock film made on location in the French Riviera that led to that momentous meeting between America’s “patrician pure-bred” star actress and Monaco’s bachelor monarch – and a subsequent change of careers and destinies!

Too much American influence in a French ‘pond’?
De Gaulle was also apparently concerned about the growing influence of Americans over Prince Rainier’s governance of Monaco…in so doing they were stepping on the toes of France, Monaco being clearly within the French sphere of influence (it also reflected De Gaulle’s wider antipathy to the ‘Americanisation’ of Europe!), a concern he harboured even before Rainier’s marriage to US film star Grace Kelly! Prior to that, Rainier had already engaged Americans as some of his closest advisers to assist him in his day-to-day duties and personal affairs✥. The 1962 political tensions between the two countries can be traced back to events in 1959, namely the Prince’s decision to suspend the Constitution (interpreted by France as a Monégaseque move towards securing US support) [Hassan, ibid.].

1950s Sister ‘coup’: Usurping Rainier
Apparently not long after Rainier ascended the throne (1949), his older sister, the Paris-born Princess Antoinette, tried to exploit a Monégaseque economic crisis at the time due to a series of reckless state loans…the Princess’ intrigues involved trying, unsuccessfully, to convince Monaco’s oligarchs that they should replace her (then) unmarried and childless brother with her legitimated son Christian as prince (with herself as regent until he came of age) [‘Monaco’s Machiavellian Princesses’, 27-Apr-2013, www.royalfoibels.com]. In the 2014 film, Grace of Monaco, to heighten the dramatic narrative of the movie, the episode of Antoinette’s attempted coup d’être (1950) is clumsily and inaccurately interwoven into the story of the 1962-63 crisis [Alex Von Tunzelmann, ‘Grace of Monaco – historically accurate? you’ve got some de Gaulle’, The Guardian, 4-Jun-2014, www.theguardian.com].

Crisis averted…through compromise
In the end a compromise was negotiated with France so that French citizens living in Monaco for less than five years were now to be taxed – at French rates, and Monegasque businesses doing more than 25% of their business outside the Principality had to pay corporate taxes for the first time, with all the revenues going back to the Treasury in Paris. The Franco-Monégaseque compromise, with some revisions from time to time, is still in effect today [Hassan, op.cit.]

Footnote: historical roots and etymological nomenclature curio
The name ‘Monaco’ derives from monos (single, alone) and oikos (house), conveying the meaning, a people “living apart” or in a “single habitation”. Monaco’s origins were as a Greek colony founded in 6th century BCE although the first inhabitants were Ligurians, an ancient Indo-European tribe – Monaco was absorbed into the Roman Empire, later invading Saracens gained control of the territory. Eventually it fell under the control of the seafaring Genoese. After one of these, François Grimaldi, disguised as a Franciscan monk, established a hold over “The Rock” in 1297, the independent status of Monaco has been periodically punctuated by the intervention of outside forces – viz. taken by France for a period in the 14th century and then retaken from 1789-1814, under Spanish protection briefly in the 16th century, and then under French protection for most other intervals of time since the Middle Ages.

∿∿∿∿∿∿

Monaco Palace ‘sideshow?’

PostScript: Personal impressions … less than overwhelming
When I visited Monaco in 2009 I was taken with just how French it was…hardly surprising given that the French Republic surrounds the tiny monarchy and French residents heavily outnumber the Monégaseque!❂ We were touring the south of France in summer and staying at Cannes, just a short drive down the road from the pocket-sized Principality. We had an early dinner at a great spot overlooking the harbour before popping into Monte Carlo to do the obligatory tourist thing of visiting the Casino (boring, bereft of atmosphere…major anticlimactic letdown that turned out to be!). Then on to the Grimaldi royal palace on “The Rock”. The take-away message I took from the royal seat of power was that it was rather akin to visiting the palatial residence of a comic-opera royal family, something along the lines of the fictional Ruritania or the Grand Duchy of Fenwick. I think the Lilliputian nature of Monaco, the sheer lack of size of the Principality adds to this notion. Monaco is less than two square kilometres, which is on the slim side for an average Sydney suburb, infinitesimally minute for a national entity – only Vatican City is smaller! One other thing that struck me on arrival at the Palace entrance and whilst strolling around its grounds, was the relative lack of security in existence (like there just wasn’t anything that important to safeguard!). The incongruous presence of odd vehicles and vessels from some sort of expeditionary enterprise within the grounds, suggesting a museum-like setting, did not reinforce an impression of a serious regal residence, say, as at Buckingham Palace. But the dubious significance of the Monégasque Principality aside, aesthetically, Palais du Prince, whilst not exactly Versailles in scale or opulence, nonetheless comprised several fine, stately buildings. The big chunk of rock the Palace sits on is a good place to take in wide views of the harbour, La Condamine with its flotilla of moored millionaires’ yachts, and of Monte Carlo across the Hericule. Tour over, we headed out of the grounds, through the tunnel to the coach taking us back to our Cannes hotel, feeling as if we hadn’t really ever left France, but had just visited a uniquely peculiar part with a slightly ‘Fantasyland’ feel about it!

The Mouse That Roared – a 1959 British satire about a fictional speck of a micro-state called ‘Grand Fenwick’ which declares war on the USA

▂▁▁▁▃▃▃▁▁▂▂▂▁▁▃▃▁▁▁▂
✱ a 2014 study revealed that 30% of Monaco’s population (around 38,000) were millionaires [‘One in a Three in a Millionaire in a Monaco: Study’, www.ndtv.com]
⊞ associated with Monte Carlo Casino, a fame reinforced by James Bond movies, but Monacoan gambling was long controlled by Greek tycoon Aristotle Onassis before his eviction by Rainier
⊛ the French press, going somewhat overboard, even called for the AS Monaco football club to be kicked out of the French championship [Hassan, op.cit].
✥ An American clerical oblate, one Father Tucker, was front and centre in the body of royal advisers at the palace…one of his very specialised roles reportedly was to select suitable, available Catholic girls for the very eligible bachelor prince, ‘Who is Father Francis Tucker in “Grace of Monaco”? This Priest Played an Interesting Role in History, Bustle, 26-May-2015, www.bustle.com
❂ only around 22% of the Principality’s population are native Monégaseques, about 47% are French or of French descent and 18%, give or take, are Italian, [‘Countries and their Cultures Forum – Monaco, www.everyculture.com/Ma-Ni/Monaco.html]