From PEOPLE Magazine Click to enlarge
AS HISTORIC ANNOUNCEMENTS GO, IT WAS HARDLY A shocker: For months, Palace watchers had predicted that the Prince and Princess of Wales would abandon their desperately unhappy marriage. The only question, it seemed, was whether the savvy Diana would manage to keep the symbols of power—and the dignity—that the Duchess of York left behind when she said goodbye to Prince Andrew. Would Di live out her days in a rented house with golf balls sailing through the backyard, à la Fergie, or would she become a formidable doyenne, reigning over a separate court? Would she be sent into aimless exile, like the Duke and Duchess of Windsor, or would she retain her position in the "family firm"—and, not incidentally, in the spotlight?

When British Prime Minister John Major broke the news of the royal separation to the House of Commons at 3:30 P.M. on Dec. 9, it became clear that the Princess had prevailed. Reading from a statement issued at the same moment by the Palace, Major announced that the Waleses, "with regret," had decided to separate, although there were no plans for a divorce. "This decision has been reached amicably," read the dispatch, "and they will both continue to participate fully in the upbringing of their children. Their Royal Highnesses will continue to carry out full and separate programs of public engagements and will from time to time attend family occasions and national events together." In his own statement, Major added that Princes William, 10, and Harry, 8, would "retain their position in the line of succession." and that "there is no reason why the Princess of Wales should not be crowned Queen in due course."

While the notion of a wife manquée being crowned Queen did seem a bit much (and drew incredulous rumblings from the House), the rest of the scenario appeared to confirm what many seasoned observers had been saying all along—that the woman who had entered the royal family as a seemingly ingenuous 20-year-old has the political instincts of a seasoned parliamentary infighter. Since June, Diana has been lobbying for a separation agreement that would allow her to escape from her marriage but retain her position as a royal. And while the Princess' tactics have been crude at times—cooperating with Andrew Morton's poor-Di bio, for example—the Queen undoubtedly realized that the guerrilla campaign in the tabloids would continue until Diana was appeased.

While the timing at first seemed cryptic, the separation announcement reportedly was made on Dec. 9 because Wills and Harry, both at school in Berkshire, were to begin Christmas holidays on Dec. 12. According to the Palace, Charles and Diana were "very keen" that the task be disposed of before the boys returned to Kensington Palace, where their mother will remain. (Charles will continue to spend time at Highgrove, his Gloucestershire estate; in London he will take quarters in Clarence House, the Queen Mum's residence.)

Although the Palace made a plea that the press let the family sort through its troubles in private, it seemed unlikely that professional royal watchers would back off. On Dec. 9, Fleet Street was on the trail as usual, and their quarry seemed surprisingly unruffled. In Wales a smiling Charles made a visit to the port of Holyhead and studiously ignored shouted questions about his marriage. Diana, too, looked tranquil. In Newcastle, where she opened a swimming pool for handicapped children, she smiled easily as she worked an enthusiastic crowd.

The air of calm was in marked contrast to the couple's icy moodiness of the previous weeks. On Nov. 21, while Charles was surveying the fire damage at Windsor Castle, Diana removed most of her belongings from Highgrove with the help of her sister Lady Jane Fellowes. Two weeks later, Charles had struck a petty blow when, on a working trip to France, he registered at a rural hotel as "Mr. Parker." An obvious reference to Camilla Parker Bowles—the confidante said to have been taped in a salacious phone conversation with Charles that surfaced last month—the pseudonym seemed calculated to embarrass the Princess.

The game of manipulation is one that both have played, however Di with considerably more success. Genuinely devoted to Wills and Harry she capitalized on Charles's tendency to be a laissez-faire father. It was Diana who took them on well-publicized jaunts to theme parks and who conspicuously stayed by Wills's side, alone, when he suffered a depressed fracture of the skull in 1991. When the marriage grew hopelessly acrimonious (and, some say, when Di learned that tapes of her kissy-face conversation with close friend James Gilbey were in the hands of tabloid editors), she found a champion in Morton. With his accounts of her alleged suicide; attempts and her struggle with bulimia in this year's Diana: Her True Story, he revealed just how desperate the Princess had become—and made it clear what sort of stir she could create if the Palace failed to take her seriously.

The now formalized separation, however, is hardly the end of the story—for the Waleses or for the Windsors. Lord St. John of Fawsley, an expert on the British constitution, predicts that in the coming years the Queen's dysfunctional clan will find itself in a new position. "For this century the monarchy has been held up as an example of family rectitude," he says. "Well, that can't go on. So the royal family will have to adapt itself to new circumstances. In some ways it will be nearer to the people because it will be sharing the family problems all of us have faced."

And as for Diana? Morton, for one, is betting that her political instincts will serve her well. "She has her own people around her now," he said. "She's building up an international platform for herself, and you'll see this continuing.... A phoenix Princess [will arise] from the ashes of this whole crumbling mess of a monarchy."