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Statelet Seeks to Stimulate Growth Royalty Prince Albert is moulding the state according MONACO 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, 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 Wlene 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 in 2004, when the OECD branded the bring in the crowds and give 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. that, we will have to improve the way as the Grand Prix are a drain on 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.
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