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MONACO (Reuters) - Tragedy and scandal have chipped away at the fairy tale principality of Monaco but locals hope a long-awaited wedding between Prince Albert and his South African fiancee will revive a faded gem on the Cote d'Azur.
His Serene Highness Prince Albert II, the 53-year-old ruler of the tiny city-state of Monaco and head of the centuries-old House of Grimaldi, will wed Charlene Wittstock, 33, this weekend in the palace courtyard during a lavish three-day celebration.
Monaco, the sunny stomping ground of the rich, known as much for its Grand Prix car race as for its lack of income tax, is abuzz with the nuptials, which take place just two months after Britain's royal wedding of Prince William to Kate Middleton.
Monegasques -- who number only around 8,000 -- hope having a dazzling new princess could revive the fortunes of Monaco, and the gambling center of Monte Carlo, which lives off its image as the epicenter of luxury, fast cars and betting tables.
"Now there will be a princess," sighed Martine Ruelle, who has worked at a Formula One store for 20 years. "It brings a dynamism to Monaco and a very beautiful image."
Saturday's wedding will be the first of a ruling prince in Monaco since Albert's father, Prince Rainier III, married Hollywood actress Grace Kelly in 1956, and locals hope Wittstock could bring back some of the glamour which died alongside Kelly in a 1982 car crash.
Albert met Wittstock -- a statuesque former national swimming champion whose champagne blonde hair and sculptured figure draws comparisons with Kelly -- in 2000 when he presided over a swimming contest in which she was competing.
Keen to dazzle the world with the new couple, the palace is laying on two tons of red carpet, a Giorgio Armani wedding gown, 3,500 guests, including some 20 heads of state, a dinner prepared by chef Alain Ducasse and a hybrid Lexus to whisk away the newlyweds. It has issued a decree encouraging residents to decorate their houses for the event.
Rumors that all was not well with the couple threatened to spoil the mood, however. The palace vehemently denied a report by French weekly L'Express on Tuesday that Wittstock tried to skip town on a one-way flight to South Africa.
The report said it had required "infinite persuasion" by the prince and members of his entourage to convince her to stay.
For weeks, flags heralding the wedding in Monaco's colors of red and white have waved from Monte Carlo's famous casino and from private homes on Le Rocher, the steep rock from which the palace peers down over the Mediterranean.
At less lofty heights, workers have erected TV screens and barricades for the crowds expected to celebrate the civil union on Friday and the religious wedding on Saturday.
Recent parking tickets have been forgiven and Friday has been made a public holiday.
The smiling couple beams in an official photograph displayed everywhere, from the upscale jewellers, designer boutiques and florists surrounding Monte Carlo's luxury hotels to a humble hardware store on the rue Grimaldi along the port.
"It allows the people to dream," said Patricia Verrando, a bathroom attendant working just steps from the palace.
"They are simple people and they are very close to their subjects. I am very patriotic and one must not say anything bad about the princely family."
The Monegasque -- a title which distinguishes Monaco's citizens from the thousands of others who live, work or play here -- said she planned to cheer the couple along the procession routes and join the public festivities: "It's something I'll recount all my life."
Luxury resorts all bank on a degree of magic to sustain themselves and Monaco is no exception. Ruled since 1297 by the Grimaldi family, the building of the Monaco myth in the modern age began with Kelly, the glamorous film star who gave up her career to marry Rainier, jumpstarting the glory days of this playground for the rich.
Kelly's death was a crushing blow for Monaco, and was followed by a series of divorces and scandals involving the couple's three children.
Prince Albert has admitted fathering a child with a flight attendant from Togo and another with a woman from California, while his sisters Stephanie and Caroline have weathered a storm of media attention over their own rocky love lives.
In another blow, the strong-minded Rainier, who had put his stamp on the principality for decades, died in 2005.
"Finally it's a happy event for Monaco," said Greek hotel worker Ari Nicolaidis, a long-time Monaco resident, of the upcoming wedding. "With this event, they'll try to forget."
For some, wedding bells aren't only happy, but lucrative.
After a decade of 8 to 10 percent growth, Monaco's tourism industry received a rude awakening when the economic crisis hit in 2009, causing a 9 percent drop in hotel guests.
Thus far, 2011 has been "very positive," and on track for a full recovery, said a tourism bureau spokesman.
The principality is now promoting VIP weddings, using the slogan "Monaco, global capital of romance." Michel Bouquier, head of the tourism board, said Monaco wants to become "the unique place for exceptional and prestigious weddings."
Monaco's gaming industry has not fared as well. Hotel and casino operator Societe des Bains de Mer, Monaco's biggest employer, is still feeling the effects of the crisis. Gambling revenues fell 14 percent in the fiscal year to May though hotel revenues recovered.
Chief Executive Bernard Lambert said the wedding should enhance business by re-introducing Monaco to people with a crowded choice of global gaming locales from Las Vegas to Macao.
"Everybody loves a princess story," Lambert said. "We have to keep the adrenaline, excitement and glamour in this casino which for me is the only truly European casino left."
While Monaco's excesses are evident -- "My first impression was 'Are we going to afford to sit somewhere and have a Coke?'" joked one British tourist floored by the red Ferraris and silver Rolls Royces around him -- some say it's resting on its laurels and the wedding excitement masks a simmering desperation.
"It's over," said a casino worker who asked not to be named.
High-rollers who once dropped bundles of cash at the tables no longer want to come, put off by what they see as a more vulgar clientele and a sense the glory days are over, he said.
As well as the ubiquitous cruise ship tourists, a new wave of moneyed visitors from emerging markets like Ukraine, Turkey, Kazakhstan and Uzbekistan now come seeking the European high life, and the safety Monaco prides itself on. The tourism office has recently opened offices in Dubai, Rio de Janeiro, Moscow, and New Delhi.
Prince Albert has also sought to clean up Monaco's reputation as a haven for tax evaders, tightening banking standards and bringing more transparency to the place British novelist Somerset Maugham once called: "a sunny place for shady people."
One thing talked about in the shadows is Prince Albert's motivation for his wedding. Some in Monaco whisper that the groom, described as good at heart but a prisoner to his heritage, is less than enthusiastic.
The marriage and an eventual heir are crucial for the future of Monaco and more about business interests than love, they say.
One Monegasque who preferred to remain anonymous put into succinct context the realities for citizens of a modern monarchy whose economic stability and political security partly rest on efforts to burnish a fairy tale image.
"We need to have dreams but we have to know if it's an illusion."
Additional reporting by Pierre Thebault; Editing by Catherine Bremer and Paul Casciato