Monaco's foreign policy
Western Europe Politics Insight Series
Superyachts, supercars, and the super-rich jetsetters who own them. Those are the main things Monaco is known for. But this tiny place - with some 36,000 residents living on less than a square mile - is a fully sovereign country. Monaco has its own military, police force, and taxes, but the principality also conducts its own foreign policy. As of 2022, the Monaco had 15 ambassadors accredited with 28 states around the world. But Monaco maintains active relationships with a total of 156 states, and has accepted 132 ambassadors from foreign countries.
But what does Monaco do on the world stage? What kind of foreign policy does it have, and how much influence? How has Monaco responded to the Ukraine crisis? And why does Monaco have a space programme?
Monaco’s foreign policy aims
The main aims of Monaco’s foreign policy are similar those of any other state. Monaco wants to protect its citizens and grow its economy. For Monaco, that means keeping the country attractive as a place to invest, maintaining a favourable climate for businesses and business people to settle, and maintaining its status as a tourist hotspot. The Monegasque government also actively tries to promote the interests of Monaco-based businesses by opening doors to business leaders across the world.
Much of Monaco’s diplomatic activity focuses on France, for good reason. France is the only country with which Monaco shares a border, and France is also ultimately responsible for Monaco’s military security. French is even the principality’s official language, and a significant part of the country’s workforce consists of French nationals residing in France but commuting into Monaco every day. Obviously, that requires a lot of coordination with France on everything ranging from national security, customs issues, and taxation of cross-border workers to the development of transport links.
The European Union (EU) is another important partner for Monaco, and both parties are working to expand upon their current relationship. Again, for good reason. As a close economic (and to some degree political) union of 27 European states including France, Monaco has extensive dealings with the EU when it comes to trade, taxation, and sometimes shared foreign and security policy issues. These dealings even include monetary policy, because Monaco’s official currency is the euro.
Monaco is not a member of the EU, though. This is one of the many complexities in Europe, where some states are members of the EU but do not have the euro, while others do have the euro but are not member states. Explaining all of that goes well beyond the scope of this piece, but what is important is that Monaco is in negotiations with the EU for membership of the European Economic Area (EEA). This means that Monaco is discussing the terms under which it can join the European Single Market. In simple terms, the EEA could be described as a single large economy shared by multiple countries, which allows people but also goods and services to move through and settle in any of the participating states, without the restrictions that would otherwise apply to international traffic.
The idea is that by joining the EEA, Monaco can get easier access to the European economy, thereby providing significant new opportunities to its businesses. It also settles a lot of the issues many non-EU countries in Europe have when it comes to trade deals, taxation etc (see Switzerland). The EEA negotiations have been ongoing since 2015, and while the both the Monegasque government and the EU have shown signs of optimism that a deal might be reached by the end of this year, joining the EEA is a very technical process that can take a lot of time. However, success in this regard will mean a significant step forward for Monaco as a small, but increasingly difficult-to-ignore player in the European context.
Soft power
As a tiny nation with only a small military, Monaco’s influence on the world stage has obvious limits. It goes without saying that Monaco cannot hope to wield the kind of military and geopolitical power possessed by the United States, China, or even its close neighbour France. That means Monaco cannot influence other countries in the same way that many other countries can. But as a wealthy and glamorous principality, Monaco does possess a degree of soft power that should not be ignored. In fact, soft power is a core part of Monaco’s diplomatic strategy.
Much of that soft power comes from Monaco’s hereditary ruler, Prince Albert II. As the head of state, Albert II is the central figure in Monegasque diplomacy, known for his extensive travels and meetings with world leaders, his presence on a range of international political platforms, and his support for efforts to protect the environment.
One example of Albert II’s diplomatic skills is Chinese President Xi Jinping’s visit to the principality in early 2022, which is important less for its limited geopolitical implications than for its economic importance to Monaco. Essentially, it helped Albert II put Monaco on the map of the Chinese.
Another significant part of Monaco’s foreign policy is philanthropic. Albert II and the Monegasque government flex their soft power through numerous charities and associations, many of which are based on Albert II’s priorities of sustainable economic development, protecting the natural environment, and combating poverty.
The principality also works together with a range of Monaco-based business groups improve business ties in numerous countries around the world, including major players in the US, China, but also much smaller nations such as Djibouti.
And then of course, there are all of the high-level events on Monaco’s agenda year, such as the Formula 1 race and the Monaco Yacht show, attracting not just large numbers of tourists but also further business opportunities.
Position on Ukraine and Russia
Monaco has long been very attractive to wealthy Russians as a place to visit, or even a place to settle permanently. Famously, quite a few of the major yachts visiting the principality are owned by Russian businessmen. But this has not prevented Monaco from aligning itself with France and the EU when it comes to the Ukrainian-Russian conflict. In 2022, Monaco supported the EU sanctions against Russia and instituted equivalent sanctions of its own, and Russia therefore regards Monaco as a hostile nation, like the vast majority of countries in Europe.
In fact, when it comes to the big geopolitical issues, Monaco often tends to align itself strongly with France and the EU. This is not just because Monaco has a stake in the wellbeing of France and the EU, it is also clear that choosing a completely different geopolitical course would create highly inconvenient tensions, harming Monaco’s foreign policy goals.
Monaco has a space programme
Not too long ago, Western European Politics wrote an analysis piece on Luxembourg’s space programme. The piece explained that the tiny nation of Luxembourg was investing heavily in space exploration because it represents a highly lucrative business opportunity, offering long-term prospects of access to rare minerals, to name but one example. By investing in space exploration and developing satellites of its own, Luxembourg is also trying to expand its geopolitical influence by building a strong position in one of the key avenues through which humanity is likely to develop in the coming decades.
Exactly the same factors apply to Monaco, which has a space programme of its own, having established its Office for Outer Space Affairs as recently as 2021. No, the image above does not show any kind of space launch conducted from within Monaco, which has never launched objects into space from within its own territory.
But Monaco’s space activities do include the development of at least two satellites (in part made by Monaco-based businesses) and participation in the international Artemis missions to explore both the Moon and Mars.
It is highly likely that Monaco will continue to support its fledgling space industry, developing it well beyond its modest current state. Just like Luxembourg, Monaco is well-placed to find the extraordinary levels of funding required for ventures of this nature.
In sum, Monaco does not appear on the European media’s radar very frequently, but the nature of its foreign policy and economic development work is too important to ignore.