Rainier's shining legacy hard to live up to

His Most Serene Highness Rainier Louis Henri Maxence Bertrand Grimaldi - sovereign prince of Monaco and Duc de Valentinois, Duc de Mazarin, Comte de Farette, Sire de Matignon et de Marchais, Baron de Lutumiere(grave on first e), Prince de Chateau(circ on first a)-Porcien - is dead. To have such a long title (this is the edited version) and rule over such a small country (marginally larger than London's Hyde Park) may seem a little pretentious.

In truth, Prince Rainier, who died yesterday aged 81 after half a century on the throne of his caviar-crumb of a country, deserved his multiple titles. He was one of the most successful heads of state the world has ever seen. He increased the annual GDP of his country 180-fold; he increased its portion of the world's land surface by 20 per cent (definitively overtaking Hyde Park). Most of all - and often against his will - he made Monaco a constant, glittering presence in the global, media limelight.

Whether his son and heir, Prince Albert II, a decent, intelligent, sporty man with the good looks of a family accountant, can extend, or even preserve, the Monaco Miracle is questioned by some. According to hints dropped by Prince Albert, 47, and his friends, he plans to make the tiny principality on the French Riviera coast a more democratic, open and financially accountable place. Many Monegasques, and the overwhelmingly non-Monegasque majority in the 32,000 population, are unsure whether they like the sound of that.

They also want to know whether Albert will finally start to catch up with his serially-married sisters, Caroline and Stephanie(aute on first e) and get married. With the death of Prince Rainier, the two smallest countries in the world have lost their heads of state within a few days of each other. Monaco, the second smallest country in the world after the Vatican, has plunged into nine days of official mourning. The mourning will be sincere.

Within his own country, Rainier, for all his authoritarian micro-management, and his celebrated rages, and despite becoming a relative recluse in recent years, was an enormously popular monarch. He died at 6.35am yesterday at Monaco's Cardiothoracic Centre, where he has been on life support for two weeks with "broncho-pulmonary, cardiac and kidney disorders". His body was immediately taken to the royal palace on the rock dominating the "capital city", Monte Carlo, and the entire 2.2 square kilometre country.

After three days' of private, family mourning, Rainier will lie in state in the palace's Palatine Chapel so that his subjects, and other residents, can pay their respects. Heads of state from all over the world, including the Queen and President Jacques Chirac, sent messages of condolence yesterday. "His courage and tenacity in the face of illness will remain with us as an example," President Chirac said.

He promised that France would continue to "uphold and reinforce the close links that unite our two countries." (In fact relations between Monaco and the local super-power have been strained thoughout Rainier's reign.) Prince Rainier will be buried in Monaco cathedral, alongside his beloved wife, Princess Grace, the former Hollywood actress, Grace Kelly (the star of "High Noon"; "Rear Window" and many other movies).

Their marriage in 1956, after they met while Alfred Hitchcock was making a film in Monaco, was the beginning of a permanent media obsession with the tiny state. The wedding united two royal families. The first was one of the oldest dynasties in the world. The Grimaldis have ruled Monaco more or less continuously since the 13th century. The second was one of the newest forms of royalty - the orginal studio-promoted galaxy of Hollywood stars. The story of such a union was irresistible. The obsession carried over to the many marriages and amorous entanglements of the couple's daughters.

Prince Rainier went to the grave carrying many secrets, one of which may be the true story of Princess Grace's death in a car accident on a mountain road in France, close to Monaco, in September 1982. Persistent rumours, including a book by a senior French police officer three years ago, suggest that the car was being diven by Princess Stephanie, who, at 17, was too young to drive in France. The story has always been adamantly denied by the Monaco royal palace and by Stephanie herself. The other great mystery of Rainier's reign - the extraordiinary economic success of Monaco - is, in a sense, no mystery at all.

He inherited from his grandfather in 1949 a sleepy sea-side town, virtually run by its famous casino. The novelist W. Somerset Maugham described it in the 1920s as "a sunny place for shady people". As recently as 1975, Monaco's GDP was the equivalent of Euros 53m a year. It is now estimated to be Euros nine billion a year. (This may represent only a small part of the sums passing through.) The Monte Carlo casino now provides only three per cent of the nation's economy. The micro-country has 4,575 businesses and 60 banks, many of which have an impenetrable existence, protected by Monaco's laws of banking secrecy and opacity.

Officially Monaco's banks hold only Euros 480m - ten times less than the banks of Luxembourg - but this, according to the OECD and others, is only a fraction of their presumed activities. Monaco has been declared by the OECD one of the world's five "uncooperative" off-shore banking centres, a pariah status that is shares with Andorra, Liberia, Liechtenstein and the Marshall Islands. There were originally 35 countries on the list. Monaco, although it has made some concessions, has refused to bow to the demands of the OECD, the G7 countries and a report by the French parliament. Five years ago, an investigation by the French national assembly declared the tiny state to be "a place conducive to money laundering".

Rainier made a few minor changes but told France that it must "respect" his independence: i.e. back off. How much Rainier knew of what was going on in the banks he attracted is unclear (like everything else about them). What was evident was that Rainier kept close control over virtually everything else that happened in Monaco. He was an absolutist monarch, "advised" by a parliament and by a secretaire d'etat(acute on e) (prime minister) who is a French diplomat on loan. He also acted as virtual town mayor and director general of Monaco PLC. The most trivial decisions - the colour of the park-keepers' uniforms; the make of motor-bikes ridden by the principality's extremely numerous police force - were taken by Rainier. The off-shore banks and companies in Monaco are subject to a small tax which is enough to pay for 50 per cent of the state budget.

The rest comes mostly from VAT. There is no income tax. The principality has therefore become a favourite residence for the rich, young and energetic. Monaco is home to most of the racing divers and tennis players you have ever heard of. It is also the principal home of, amongst others, Ringo Starr, Shirley Bassey and a lot of Russians who would prefer not to give their names. Of the 32,000 people living in Monaco, only 6,000 of them are Monegasque citizens and have the right to vote for a parliament, which has a little more influence than it used to have (but not very much). If you are a rich resident, anything goes. For everyone else, there is a suffocating atmosphere of conformist authoritarianism (no picnics in the parks; no singing in the street). Monaco has been described as "like East Germany with Rolls Royces". By reclaiming land from the sea, Monaco under Rainier was able to extend its land area by one fifth.

Its Mediterranean "polders" house amongst other things, a football stadium for AS Monaco, the club which plays in the French first division and reached the final of the European Champions' League last year. Home attendance is often pitifully small. Albert is a faithful fan. So was Rainier, when healthy. The racing drivers, tennis players and Russian billonaires seldom go to the match. The Grimaldi family's connection to Monaco goes back to 1297 when a Genoese pirate chieftain called Lanfranco Grimaldi seized the rock.

He and his henchmen were dressed up as monks. Opportunism and piety has been a feature of the Grimadi dynasty ever since. The reign of Prince Albert II may be different. Father and son were frequently said to have a strained relationship. Prince Albert stutters in French (his father's language) and speaks freely in English (his mother's language). According to French psychologists, this is a sign that Albert has always felt intimidated by his father. Albert, who was educated at Amherst College in Massachusetts and has worked in Wall Street and the City, is an able, unspectacular man. He is obsessively sporty and once had ambitions to play professional football. That came to nothing but he did captain the Monaco bobsleigh team in four successive winter Olympics.

For reasons unknown - an other secret - his father kept promising to bequeath Albert a share in the running of Monaco but always failed to deliver. One Monaco official told the French news agency AFP yesterday that Albert blamed the coterie of veteran officials who surrounded his father. "You will see some spectacular changes in the months to come," the official said. The fact that Albert has never married has provoked rumours that he is gay.

His friends say that he is energetically heterosexual. Celebrity magazines in France are constantly linking him to super-models and actresses. Albert, in the sparse comments that he has made on the subject of his love-life, says that he had had several very close girl-friends. None of them, he has hinted, could bear the idea of taking over from Grace, Caroline and Stephanie as principal exhibit in the media aquarium of Monaco.

Under the principality's original constitiution, the tiny state would have disappeared and been swallowed up by France if Albert had failed to produce an heir. The constitution was amended three years ago to allow the succession to pass - if necessary - to his sisters and his aunt and their children and grand-children.

A greater worry for some of Monaco's residents is whether Albert will carry through his apparent desire to clean up the statelet's financial act, introduce more democracy and open some of its opulent, stuffy windows. The Monaco Miracle can survive an unmarried prince. Can it survive a Monegasque version of glasnost?

- INDEPENDENT