954km (593 miles) S of Paris; 18km (11 miles) E of Nice

The outspoken Katharine Hepburn once called Monaco "a pimple on the chin of the south of France." She wasn't referring to the principality's lack of beauty, but rather to the preposterous idea of having a little country, a feudal anomaly, taking up some of the Riviera's best coastline. Hemmed in by France on three sides and facing the Mediterranean, tiny Monaco staunchly maintains its independence. Even Charles de Gaulle couldn't force the late Prince Rainier to do away with his tax-free policy. As almost everybody in an overburdened world knows by now, the Monȳgasques do not pay taxes. Nearly all their country's revenue comes from tourism and gambling.

Monaco -- or rather, its capital of Monte Carlo -- has for a century been a symbol of glamour. Its legend was further enhanced by the 1956 marriage of the man who was at that time the world's most eligible bachelor, Prince Rainier III, to the American actress Grace Kelly. Ms. Kelly met the prince when she was in Cannes for the film festival to promote To Catch a Thief, the Hitchcock movie she made with Cary Grant. A journalist friend arranged a Paris Match photo shoot with the prince -- and the rest is history. The Monȳgasques welcomed the birth of daughter Caroline in 1957 but went wild at the birth of Albert, a male heir, in 1958. According to a 1918 treaty, Monaco will become an autonomous state under French protection if the ruling dynasty becomes extinct. However, the fact that Albert is still a bachelor has the entire principality concerned. The third royal daughter, Stephanie, was born in 1965.

Though not always happy in her role, Princess Grace won the respect and adoration of her people. In 1982, a sports car she was driving, with her daughter Stephanie as a passenger (not as the driver, as was viciously rumored), plunged over a cliff, killing Grace but only injuring Stephanie. The Monȳgasques still mourn her death.

Monaco became a property of the Grimaldi clan, a Genoese family, as early as 1297. With shifting loyalties, it has maintained something resembling independence ever since. In a fit of impatience the French annexed it in 1793, but the ruling family recovered it in 1814; however, the prince at that time couldn't bear to tear himself away from the pleasures of Paris for "dreary old Monaco."