How, many wondered, would the tiny principality — a tower-studded rock the size of Hyde Park — manage without le Patron, as their monarch-cum-chief-executive was affectionately known? Will France, which surrounds the state, now seek to cramp Monaco’s independence? Prince Albert, 47, the new ruler of the 700-year-old “Monaco Inc”, has so far shown little of the Grimaldi grit that was so evident in his father.

The old Prince had been in poor health for a decade and never recovered after the death of Princess Grace, his wife and a former film star, in a car crash in 1982. Yet he retained a firm hand on the booming enterprise that he created from his meagre inheritance in 1949.

When Rainier succeeded Prince Louis, his grandfather, Monaco was a seedy operetta setting, a faded Belle Epoque casino town on the Riviera famously described by Somerset Maugham as a “sunny place for shady people”. The treasury was nearly empty and Rainier’s mother, Princess Charlotte, had run off with a jewel thief known as René “the Walking Stick”.

The raffish atmosphere can be felt in To Catch A Thief , the 1954 Hitchcock film starring Cary Grant and Grace Kelly. According to legend, Kelly looked down at Monte Carlo while filming a hillside scene and asked: “Who owns the gardens below?” She was told that they belonged to Prince Rainier. Two years later they married.

The glamour bestowed by Hollywood’s most regal actress was a staple ingredient in Rainier’s campaign to turn Monaco into a fairytale haven for the very rich and their money. Five years ago he summed up his formula:

“Monaco must make people dream, at the same time as being an active and modern country.” He said that the principality had shed its image of “idleness and gambling” and replaced it with three values: calm, security and cleanliness.

Some of Maugham’s shady people may never have left, but the Prince, who was partly educated at Stowe and won the Croix de Guerre fighting in the French Army in 1944, took only a few years to begin attracting the investment that eventually turned a medieval anachronism into a multi- billion-pound banking and property centre.

In 1962 he overhauled the Constitution and began an ambitious construction project, cramming the hillsides with multistorey apartment blocks, building a new port and reclaiming land from the sea to expand Monaco’s territory by 20 per cent.

While building his state, he saw off some of the world’s toughest operators, including Aristotle Onassis, the late Greek shipping tycoon, and General Charles de Gaulle, the late French President.

After bringing Onassis in to develop the casino and resort business, Rainier forced him to get out again by royal decree in 1966.

In a David and Goliath struggle, Rainier outmanoeuvered de Gaulle in 1962, when the general clamped a customs quarantine on Monaco to punish the Prince for taking over French interests. Rainier made a single big concession: granting France the right to tax its citizens resident in Monaco, where customarily no income tax is applied. In return he won greater French acceptance of Monaco’s separate status.

France continues to provide Monaco’s Chief Administrator and most of its judges and firemen. It also runs Monaco’s foreign policy and helps to keep its treasury afloat with millions of pounds a year in VAT returns. But Rainier successfully shored up Monaco’s sovereignty and financial security, often to the frustration of the French. In 2002 he changed the Constitution to allow female succession, meaning that Caroline and her children could inherit the throne if Albert produced no successor. Under a 1918 treaty, sovereignty was supposed to revert to France in the absence of a male heir.

Rainier also emerged victorious from a tussle with France four years ago, in which a parliamentary enquiry reported that Monaco, with its 45 secretive banks, was a haven for money laundering. Rainier accused Paris of jealousy.

“We are a sovereign state. For too long, we have accepted that our sovereignty be limited,” he said.

Again he ceded to some French demands, applying international vetting practices on the movement of funds. But he also secured seats for Monaco at the United Nations and at the Council of Europe.

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