Monaco - Domestic policy

Under Prince Rainier, Monaco has evolved from a declining gambling enclave to an economically and culturally diverse principality. Land reclamation projects, such as the Fontvielle Quarter in 1985, have increased Monaco's territory by 20% and provided a location for new industrial plants. The arts and especially oceanography are given generous support by Prince Rainier's government.

Monaco's government has also been instrumental in ensuring that all residents share in the prosperity. Native-born citizens are guaranteed jobs in government services. A law also stipulates that companies must first offer jobs to native-born Monegasques, who represent nearly 5,000 of all inhabitants, then to local residents, and finally to the inhabitants of the four communities surrounding Monaco. Social unrest is rare, although in December 1999, government workers went on strike for the second time since World War II to demonstrate for a 35-hour work week, in line with the law debated in the French National Assembly.

Gambling now accounts for only 4.35% of total revenue while value-added taxes (VAT) on hotels, banks, and industry generated 55% of public revenues in 1999. Monaco levies the same rate of VAT as the French rate of 21%. France, however, is under pressure by the commission to bring its rate closer in harmony with European-wide rates, and it is possible that French VAT will drop by 2% in the near future. Such adjustments would result in a drop of 10% in Monaco's overall revenues. A quarter of government revenue comes from tourism. Despite successful efforts to clean up its image though, Monaco was named a "tax outlaw" in 2002 by the Organization for Economic Cooperation and Development (OECD).

Prince Rainier has more or less realized his agenda for making Monaco thrive economically and culturally apart from its previous mainstay, gambling. Yet its economic prosperity is constrained by its reliance on France. An economic downturn in France has a ripple effect on Monaco. The next phase in reducing dependence on France has been to promote business conventions and conferences. In July 2000, the prince opened a new convention center.

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