Monaco
2016 Country Review
Table of Contents
Chapter 1 1
Country Overview 1
Country Overview 2
Key Data 3
Monaco 4
Europe 5
Chapter 2 7
Political Overview 7
History 8
Political Risk Index 16
Political Conditions 9
Political Stability 30
Freedom Rankings 45
Human Rights 57
Government Functions 60
Government Structure 62
Principal Government Officials 64
Leader Biography 65
Leader Biography 65
Foreign Relations 67
National Security 70
Defense Forces 71
Chapter 3 73
Economic Overview 73
Economic Overview 74
Nominal GDP and Components 79
Population and GDP Per Capita 81
Real GDP and Inflation 82
Government Spending and Taxation 83
Money Supply, Interest Rates and Unemployment 84
Foreign Trade and the Exchange Rate 85
Data in US Dollars 86
Energy Consumption and Production Standard Units 87 Energy Consumption and Production QUADS 88
World Energy Price Summary 89
CO2 Emissions 90
Agriculture Consumption and Production 91
World Agriculture Pricing Summary 93
Metals Consumption and Production 94
World Metals Pricing Summary 96
Economic Performance Index 97
Chapter 4 109
Investment Overview 109
Foreign Investment Climate 110
Foreign Investment Index 113
Corruption Perceptions Index 126
Competitiveness Ranking 137
Taxation 146
Stock Market 146
Partner Links 147
Chapter 5 148
Social Overview 148
People 149
Human Development Index 150
Life Satisfaction Index 154
Happy Planet Index 165
Status of Women 174
Global Gender Gap Index 176
Culture and Arts 186
Etiquette 187
Travel Information 188
Diseases/Health Data 197
Chapter 6 202
Environmental Overview 202
Environmental Issues 203
Environmental Policy 204
Greenhouse Gas Ranking 205
Global Environmental Snapshot 216
Global Environmental Concepts 227 International Environmental Agreements and Associations 241
Appendices 266
Bibliography 267 Monaco
Chapter 1
Country Overview
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Monaco
Country Overview
MONACO
Monaco is a tiny microstate located in Western Europe, bordering the Mediterranean Sea on the southern coast of France, close to the border with Italy. Present-day Monaco is the situated on the site of a Genoese-built fortress in 1215. The current ruling Grimaldi family first seized temporary control in 1297, and again in 1331, but were not able to permanently secure their holding until
1419. Economic development was spurred in the late 19th century with a railroad linkup to France and the opening of a casino. Since then, the principality's mild climate, splendid scenery, and gambling facilities have made Monaco world famous as a tourist and recreation center.
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Monaco
Key Data
Key Data
Region: Europe
Population: 30535
Climate: Mediterranean with mild, wet winters and hot, dry summers.
French (official)
English
Languages:
Currency: 1 Euro = 100 cents
Holiday: National Day, 19 November
Area Total: 2
Area Land: 2
Coast Line: 4
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Monaco
Monaco
Country Map
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Monaco
Europe
Regional Map
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Monaco
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Chapter 2
Political Overview
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Monaco
History
Historical Highlights
In 1215, Monaco was founded as a colony of Genoa.
The House of Grimaldi has ruled Monaco since 1297, except when under French control from
1789 to 1814.
From 1815 until 1860, Monaco was designated a protectorate of Sardinia by the Treaty of Vienna.
The Franco-Monégasque Treaty of 1861 recognized Monaco's sovereignty.
The prince of Monaco was the absolute ruler until a constitution was promulgated in 1911.
In July 1918, a treaty was signed providing for limited French protection over Monaco. The treaty, written into the Treaty of Versailles, established that Monégasque policy would be aligned with
French political, military and economic interests.
Prince Rainier III, the ruler of Monaco, acceded to the throne following the death of his grandfather, Prince Louis II, in 1949. The current heir apparent, Prince Albert, was born in 1958.
A new constitution, proclaimed in 1962, abolished capital punishment, provided for female suffrage, and established a Supreme Court to guarantee fundamental liberties.
In 1993, Monaco became an official member of the United Nations-with full voting rights.
In 2005, Prince Rainier III died and was succeeded by his son, Prince Albert.
Editor's Note: A historical chronologue of Monaco is available at the official Monaco website at
URL:
Note on History: In certain entries, open source content from the State Department Background
Notes and Country Guides have been used. A full listing of sources is available in the Monaco Review 2016 Page 8 of 279 pages
Monaco
Bibliography.
Political Conditions
Editor's Note:
Rainier III ascended to Monaco's throne in 1949. The House of Grimaldi has ruled the small
European principality since 1297. Prince Rainier was Europe's longest-reigning monarchs and was married to the late American actress Grace Kelly. Crown Prince Albert, as the only son of Prince
Rainier and Princess Grace was the Heir Apparent to the throne, however, he has not married and has had no children. Consequently, the principality's constitution was changed in 2002 to provide for succession of the throne via the offspring of the Prince Albert's sisters, Princess Caroline and Princess Stephanie. Rainier III died in 2005 and was succeeded by his only son, Prince Albert II.
Chronology from the late 1990s to 2008:
In the general elections held February 1998, the ruling "Union Nationale et Démocratique"
(National and Democratic Union or UND) gained three seats over its previous total to capture all
18 seats in the National Council. The "Union Nationale pour l'Avenir de Monaco" (National Union for the Future of Monaco or UNAM) won no seats. The new National Council was, therefore, made up of eight new members and ten incumbents.
The new government was formed by the UND on Feb. 19, 1998, under Minister of State, Michel
Lévêque. The Minister of State functions as the executive head of the four-member Council of Government and holds executive authority, under the aegis of the Head of State and reigning monarch, which at the time was Prince Rainier III.
In January 2000, Patrick Leclercq replaced Lévêque as Minister of State.
The most pressing domestic and foreign policy issue faced by the government during that period involved an unflattering June 2000 Organization for Economic Development (OECD) report listing
Monaco as one of 35 "tax havens." The Paris-based OECD is an organization of 30 developed countries from around the world that are known for their regular "black lists" of tax havens.
The OECD expressed concern about small states that allow non-resident individuals and enterprises to pay little or no taxes, and then fail to provide financial information to those individuals' and enterprises' countries of origin. The OECD promised to allow its member states to
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Monaco apply economic sanctions to countries that fail to comply with a list of tax and financial information disclosure reforms.
In June 2000, these alleged tax havens were given one year to comply with the OECD's reform proposals. A new OECD report was due for release in July 2001.
At that time -- in July 2001 -- Monaco was included in a seven-member blacklist, which included
Liberia, Andorra, Liechtenstein, the Marshall Islands, Nauru and Vanuatu, by the OECD. All seven countries were threatened with sanctions if their governments failed to improve the financial transparency and accountability standards by the following year.
With the Euro scheduled for circulation as the currency among many Western European countries, issues regarding money laundering, tax havens and opaque finances were of great importance.
Indeed, it was regarded as essential that the countries of the European Union coordinate their financial practices in preparation for the circulation of the Euro.
Although Monaco was one of the countries which pledged reform of its financial system, as well as cooperation in tax haven and money laundering investigations, in April 2002, it was again named as one of the countries not yet committing itself to the refom of its financial and tax regimes.
Tax policies were also at issue in March 2003 when also the European Union's Council of Economics and Finance Ministers declared that Luxembourg, Austria and Belgium, would not be compelled to exchange information on tax matters even though that requirement was a key part of the OECD's Harmful Tax Competition Initiative. Monaco, San Marino, Andorra, and Liechtenstein would also benefit from a similar type of arrangement.
The problem with the declaration by the European Union's Council of Economics is that it is incongruous with previous requirements by the OECD. Indeed, the OECD has blacklisted several small countries, mainly from Europe, the Caribbean and the Pacific, for engaging in what it called
"harmful tax practices" and has tried to influence changes in those countries' taxation practices.
(See above for related list of countries).
Many of those small states have tried to make changes to bring their taxation structures in line with international standards and were most dismayed to discover the new provision by the European
Union, which would effectively offer the European countries less rigorous standards of compliance. As well, these European countries, such as Monaco, would be allowed to apply a withholding tax on savings held by residents of other member states in a rather open-ended arrangement.
The issue resulted in a formal series of complaints from a number of Caribbean countries against the arrangement, thus placing Monaco (and several other European countries) at the center of an Monaco Review 2016 Page 10 of 279 pages Monaco international tax dispute.
Meanwhile, at the end of 2002, Monte Carlo -- the major city of Monaco-- was the venue of the Bureau of International Exposition (BIE) meeting. The meeting was convened for the purpose of chosing the World Expo 2010 from among the five candidate cities. In the running were Moscow
(Russia), Queretaro (Mexico), Shanghai (China), Wroclow (Poland) and Yeoso (South Korea). The World Exposition is the global forum of economy, science and technology, intended to promote the exchange of ideas and development in a non-commercialized format. China was eventually chosen as the venue.
Also in 2002, with the Crown Prince still unmarried and having fathered no children, legislation was drawn up to provide for the succession of the throne through females within the Grimaldi family lineage. Princess Caroline was thus second in line to the throne after Prince Albert.
In the realm of politics, during the elections held on Feb. 9, 2003, then-ruling party, "Union
Nationale et Démocratique" (National and Democratic Union or UND), captured 41.5 percent of the popular vote but lost most of its seats in parliament. It held on to only three seats in total. The "Union Nationale pour l'Avenir de Monaco" (National Union for the Future of Monaco or UNAM), joined a coalition called Union pour Monaco ("Union for Monaco" or UPM) and swept to overwhelming victory with 58.5 percent of the popular vote, thus garnering 21 of the 24 available parliamentary seats.
In this way, the UPM coalition ousted the National Democratic Union (UND), which held power for 40 years. The three-party UPM coalition has been led by former UND member, Stephane
Valeri. Election turnout was an overwhelming 80 percent among 5,800 eligible voters.
The leader of the UND, Jean-Louis Campora, who had been Monaco's parliamentary speaker and head of the National Council (Monaco's legislative body) for 30 continuous years, failed to hold on to his seat and was ousted from office.
Following the officialization of the election results, Valeri became the President of the National
Council. The new government was formed by the UPM. At the executive level, Minister of State
Patrick Leclercq continued at the helm.
Note: As noted above, the Minister of State functions as head of the four-member Council of Government and holds executive authority under the aegis of the Head of State and reigning monarch, which at the time was Prince Rainier III. The President of the National Council leads the parliamentary body.
In 2004, political attention in Monaco shifted from the familiar subject of taxation policy to national security. In late May, an explosion occurred at the Louis II stadium where the administrative
Monaco Review 2016 Page 11 of 279 pages Monaco office of the Monaco football team is located. The venue has also been home to several private companies. No deaths or injuries were reported and no claim of responsibility was offered.
Forensic police arrived on the scene to search for evidence while the Monegasque Public Safety
Services planned to launch an investigation into what happened and the possible motivation.
A year later in May 2005, Jean-Paul Proust took over as Monaco's Minister of State, succeeding
Patrick Leclerq who had served since 2000.
Meanwhile, the year 2005 began with concern over the health of the reigning monarch of the principality or Monaco. By March 2005, Prince Rainier had been hospitalized for heart, lung and kidney problems. Then, in April 2005, Monaco's Prince Rainier was on life support as his health deteriorated. Palace officials released a statement saying: "The state of health of His Serene
Highness Prince Rainier III is continuing to worsen." Indeed, a palace spokesperson said that the 81-year old monarch's health was "precarious" and indicated that there was a small chance of his recovery. Consequently, Crown Prince Albert had assumed his father's duties.
Only days after the statement regarding the precarious state of Prince Rainier's health was released, the monarch of Monaco died. Leaders around the world, including British monarch Queen
Elizabeth II, French President Jacques Chirac and United Nations Secretary General Kofi
Annan, expressed their sorrow at his passing. Officials said that his body would lie in state at the royal palace. The funeral was scheduled for April 15, 2005, at Monaco's cathedral.
Prince Rainier's son took the title of Prince Albert II effectively assuming de facto rule of the principality until the role was made official following the funeral and the mourning period was complete.
Prince Albert II formally became the ruler of Monaco on July 12, 2005. The coronation began with a cathedral mass at the same place where Prince Rainier had been laid to rest three months prior. Prince Albert II's accession to the throne was a two-step process whereby an elaborate ceremony -- attended by heads of state -- ensued on November 19, 2005.
Educated at Amherst College in Massachusetts in the United States, the new monarch -- Prince
Albert II -- speaks English, French, German and Italian fluently. Over the course of the past two decades, he has been groomed to succeed his father on the throne. Following a tour of duty with the French navy, Prince Albert II worked in various fields including investment banking and luxury goods commerce. Unmarried and with a reputation as a rather shy playboy with a sports fetish, the prince has had no heirs. As noted earlier, due to changes in the law of the land, his sister
Princess Caroline is now second in line to the throne.
In the meanwhile, however, Prince Albert II will rule the principality with a focus on the maintenance of Monaco's stability. His father garnered a good reputation as an astute manager of Monaco Review 2016 Page 12 of 279 pages Monaco
Monaco's affairs principally because he had staved off France's attempt to bring the principality under the aegis of French taxation law. His reputation was enhanced when he had expanded the economic base through the manufacturing, financial and tourism sectors. The glamour of Prince
Rainier III's marriage to actress Grace Kelly only added to Monaco's cachet. However, the familial scandals, as well as the reputation of Monaco as a haven for tax evaders, Nazi money launderers and Russian mafia, have collectively undermined the more favorable depictions.
At the age of 47, as Prince Albert II assumed the throne, he was to be faced with the prospect of maximizing the successes of his father while curbing the negative elements.
In February 2006, Monaco received its first overseas ambassador from France. It was a historic step for a country that has, itself, sent representation abroad and has had a seat at the United
Nations for many years.
Meanwhile, Prince Albert II's status as an unmarried monarch with no legal heirs took center stage in recent years. In 2005, it was revealed that he had fathered an illegitimate child a few years earlier. The mother of the young boy was a French flight attendant of Togolese ancestry. Then, a year later, Prince Albert II's attorney disclosed that the ruler of Monaco was the biological father of a 14-year old girl. In that case, the child was a product of a brief affair with a woman in
California. Neither of Prince Albert II's two biological children were legally able to assume the throne as his heirs since they were both born out of wedlock.
On February 3, 2008, the people of Monaco voted in the National Council of Monaco, which meets at least twice a year to discuss matters of the economy and to approve measures set forth by the Prince of Monaco. In the previous election in 2003, the Union for Monaco group
(UPM), which includes the three groups: -- the National Union for the Future of Monaco
(UNAM), the Union for the Principality (UP) and the Promotion of the Monegasque Family
(PFM) -- won 21 out of the 24 available seats, 3 of which went to the opposing group Rally for
Monaco-National and Democratic Union (RM-UND). In the 2008 election, the two groups were set to face off once again in an attempt to redistribute the seats per party. Stéphane Valeri, as the president of the National Council and as the leader of the UPM, hoped to continue the majority in the National Council. He was successful since his party won an overwhelming majority -- 21 of the 24 available seats, with the opposition taking 3 seats.
At the closed of 2008, Monaco terminated plans to expand its terrain into the sea via land reclamation. Monaco said that it was abandoning the project given a combination of the international financial crisis (started in October 2008) and ecological concerns.
Special Entry:
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In August 2007, Andorra, Liechtenstein and Monaco were on the "blacklist" or "The List of Uncooperative Tax Havens" by the Organization for Economic Co-operation and Development(OECD).
In October 2008, at an OECD meeting in Paris, France and Germany led a charge that included 15 other countries, to draw up a new "blacklist" of tax havens. At issue has been the allegation that there are several more countries across the globe where undeclared funds are concealed, and where unrelegated financial activities take place (such as non-regulated hedge funds).
In February 2009, French President Nicolas Sarkozy signaled a warning to Monaco on the issue of tax havens, saying that he wanted to "review the relations" between France and Monaco.
Increased attention on such matters has gained steam in the wake of the global financial crisis. In
Europe, Germany and France have urged the OECD to add a number of countries to its "blacklist," charging that there were several countries that were tacitly encouraging tax fraud. Accordingly, such countries were faced with the prospect of possible sanctions.
Editor's Note:
The Organization for Economic Co-operation and Development(OECD) has focused on what it terms as "harmful tax practices" and tax havens since 1998. While some parties have supported
OECD's activities, noting that transparency is a key component of healthy financial activity, opponents of the OECD have pointed to the sanctity of tax policy within sovereign states. The OECD has maintained a "blacklist," in actuality "The List of Uncooperative Tax Havens" in their charge to increase transparency tax affairs.
Update (2010-2012)
Note that Minister of State Michel Roger took over as head of government in March 2010, succeeding Minister of State Jean-Paul Proust; as is typically the case, Roger was appointed by the prince from a list of French national candidates presented by the French government.
On July 1, 2011, Prince Albert II, the ruling monarch of the tiny principality of Monaco in the Mediterranean, officially wed a South African Olympic swimmer, Charlene Wittstock, in a private civil ceremony at the royal palace by. A festive ceremony and celebration, featuring world leaders on the guest list, was scheduled for July 2, 2011.