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Born in Paris, in his formative years his art was sponsored by Rainer Maria Rilke, Maurice Denis, Pierre Bonnard and Pierre Matisse. His father, Erich Klossowski, a noted art historian who wrote a monograph on Daumier, and his mother, Elisabeth Dorothea Spiro (known as the painter Baladine Klossowska), were part of the cultural elite in Paris. Balthus's older brother, Pierre Klossowski, was a philosopher and writer influenced by theology and the works of the Marquis de Sade. Among the visitors and friends of the Klossowskis were famous writers such as André Gide and Jean Cocteau, who found some inspiration for his novel Les Enfants Terribles (1929) in his visits to the family.

In 1921 Mitsou, a book which included forty drawings by Balthus, was published. It depicted the story of a young boy and his cat, with a preface by Balthus's mentor, theBohemian-Austrian poet Rainer Maria Rilke (1875-1926) who at the time was his mother's lover. The theme of the story foreshadowed his lifelong fascination with cats, which resurfaced with his self-portrait as The King of Cats (1935). In 1926 he visited Florence, copying frescos by Piero della Francesca, which inspired another early ambitious work by the young painter: the tempera wall paintings of the Protestant church of the Swiss village of Beatenberg (1927). From 1930 to 1932 he lived inMorocco, was drafted into the Moroccan infantry in Kenitra and Fes, worked as a secretary, and sketched his painting La Caserne (1933).

Moving in 1933 into his first Paris studio at the Rue de Furstemberg and later another at the Cour de Rohan, Balthus showed no interest in modernist styles such asCubism. His paintings often depicted pubescent young girls in erotic and voyeuristic poses. One of the most notorious works from his first exhibition in Paris was The Guitar Lesson (1934), which caused controversy due to its sexually explicit depiction of a girl arched on her back over the lap of her female teacher, whose hands are positioned on the girl as for playing the guitar: one near her exposed crotch, another grasping her hair. Other important works from the same exhibition included La Rue (1933), La Toilette de Cathy (1933) and Alice dans le miroir (1933)

In 1937 he married Antoinette de Watteville, who was from an old and influential aristocratic family from Bern. He had met her as early as 1924, and she was the model for the aforementioned La Toilette and for a series of portraits. Balthus had two children from this marriage, Thaddeus and Stanislas (Stash) Klossowski, who recently published books on their father, including the letters by their parents.

Early on his work was admired by writers and fellow painters, especially by André Breton and Pablo Picasso. His circle of friends in Paris included the novelists Pierre Jean Jouve, Antoine de Saint-Exupéry, Joseph Breitbach,Pierre Leyris, Henri Michaux, Michel Leiris and René Char, the photographer Man Ray, the playwright and actorAntonin Artaud, and the painters André Derain, Joan Miró and Alberto Giacometti (one of the most faithful of his friends). In 1948, another friend, Albert Camus, asked him to design the sets and costumes for his play L'État de Siège (The State of Siege, directed by Jean-Louis Barrault). Balthus also designed the sets and costumes for Artaud's adaptation for Percy Bysshe Shelley's The Cenci (1935), Ugo Betti's Delitto all'isola delle capre (Crime on Goat-Island, 1953) and Barrault's adaptation of Julius Caesar (1959–1960).

In 1940, with the invasion of France by German forces, Balthus fled with his wife Antoinette to Savoy to a farm inChamprovent near Aix-les-Bains, where he began work on two major paintings: Landscape near Champrovent(1942–1945) and The Living Room (1942). In 1942, he escaped from Nazi France to Switzerland, first to Bern and in 1945 to Geneva, where he became a friend of the publisher Albert Skira as well as the writer and member of theFrench Resistance, André Malraux. Balthus returned to France in 1946 and a year later traveled with André Masson to Southern France, meeting figures such as Picasso and Jacques Lacan, who eventually became a collector of his work. With Adolphe Mouron Cassandre in 1950, Balthus designed stage decor for a production of Mozart's opera Così fan tutte in Aix-en-Provence. Three years later he moved into the Chateau de Chassy in theMorvan, living with his step-niece Frédérique Tison and finishing his large-scale masterpieces La Chambre (The Room 1952, possibly influenced by Pierre Klossowski's novels) and Le Passage du Commerce Saint-André (1954).

As international fame grew with exhibitions in the gallery of Pierre Matisse (1938) and the Museum of Modern Art (1956) in New York City, he cultivated the image of himself as an enigma. In 1964, he moved to Rome where he presided over the Villa de Medici as director (appointed by the French Minister of Culture André Malraux) of the French Academy in Rome, and became a friend of the filmmaker Federico Fellini and the painter Renato Guttuso.

In 1977 he moved to Rossinière, Switzerland. That he had a second, Japanese wife Setsuko Ideta whom he married in 1967 and was thirty-five years his junior, simply added to the air of mystery around him (he met her in Japan, during a diplomatic mission also initiated by Malraux). A son, Fumio, was born in 1968 but died two years later.

The photographers and friends Henri Cartier-Bresson and Martine Franck (Cartier-Bresson's wife) both portrayed the painter and his wife and their daughter Harumi (born 1973) in his Grand Chalet in Rossinière in 1999.

Balthus was one of the few living artists to be represented in the Louvre, when his painting The Children (1937) was acquired from the private collection of Pablo Picasso.

He died in Rossinière, Switzerland. Prime ministers and rock stars alike attended his funeral. Bono, lead singer of U2, sang for the hundreds of mourners at the funeral, including the President of France, the Prince Sadruddhin Aga Khan, supermodel Elle Macpherson, and Cartier-Bresson.

Balthus's style is primarily classical. His work shows numerous influences, including the writings of Emily Brontë, the writings and photography of Lewis Carroll, and the paintings of Masaccio, Piero della Francesca, Simone Martini, Poussin, Jean-Étienne Liotard, Joseph Reinhardt, Géricault, Ingres, Goya, Jean-Baptiste-Camille Corot,Courbet, Edgar Degas, Félix Vallotton and Paul Cézanne. Although his technique and compositions were inspired by pre-renaissance painters, there also are eerie intimations of contemporary surrealists like de Chirico. Painting the figure at a time when figurative art was largely ignored, he is widely recognised as an important 20th-century artist.

Many of his paintings show young girls in an erotic context. Balthus insisted that his work was not erotic but that it recognized the discomforting facts of children's sexuality. In 2013, Balthus's paintings of adolescent girls were described by Roberta Smith in the New York Times as both "alluring and disturbing".

Balthus's father, Erich, was born to a family supposedly belonging to the former Polish petty nobility (drobna szlachta), bearing the Rola coat of arms and living in thePrussian part of today's Poland. This (largely undocumented) family background prompted his son Balthus to add, later, "de Rola" to his family name Klossowski, which was in szlachta tradition (if he had lived in Poland, the arrangement of his last name would have been Rola-Kłossowski or Kłossowski h. Rola). The artist was very conscious of his Polish ancestry and the Rola arms was embroidered onto many of his kimono, in the style of Japanese kamon.[citation needed]

In the catalogue of the Metropolitan Museum of Art's 1984 Balthus exhibition, Balthus' mother, Baladine Spiro, was described as the daughter of a cantor from Kovelitz in Novgorod in the Russian Empire. Balthus told his biographer Nicholas Fox Weber that this was erroneous, and that his mother came "apparently from a Protestant family in the south of France".According to Weber, Balthus would frequently add to the story of his mother's ancestry, saying that she was also related to the Romanov, Narischkin, and lesser known Raginet families among others, though conceding Balthus never claimed his mother's side was from a straight unmixed lineage. Weber quoted Baladine's lover, the poet Rainer Maria Rilke, who stated that the Spiros were descended from one of the richest Sephardic-Spanish families. Weber wrote: "The artist neglected, however, to tell me that, in the most miserable of ironies, Fumio (Balthus's son) suffered from Tay-Sachs disease."Weber presented this as evidence that Balthus was lying about not having Jewish ancestry, given Tay-Sachs is a heavily Ashkenazic-Jewish disease. This conflicts with Rilke's report of the Spiros being Sephardic, which Weber later said was a "Rilke embellishment" and also brings up the relevance of the preponderance of Japanese infantile Tay-Sachs, since Balthus's wife was Japanese. Balthus was also supposed to have fathered in 1942 Stanislas Klossowski, a figure in swinging London and Paris in the 1960s. His work has influenced several contemporary artists, notably Duane Michals and Émile Chambon.

He has also influenced the filmmaker Jacques Rivette of the French New Wave, whose film Hurlevent (1985) was inspired by Balthus's drawings made at the beginning of the 1930s: "Seeing as he's a bit of an eccentric and all that, I am very fond of Balthus (...) I was struck by the fact that Balthus enormously simplified the costumes and stripped away the imagery trappings (...)".

A reproduction of Balthus's Girl at a Window (a painting from 1957) prominently appears in François Truffaut's film Domicile Conjugal (Bed & Board, 1970). The two principal characters, Antoine Doinel (Jean-Pierre Léaud) and his wife Christine (Claude Jade), are arguing. Christine takes down from the wall a small drawing of about 25×25 cm and gives it to her husband: Christine: "Here, take the small Balthus." Antoine: "Ah, the small Balthus. I offered it to you, it's yours, keep it."

Harold Budd's album The White Arcades includes a track titled "Balthus Bemused by Color".

Robert Dassanowsky's book Telegrams from the Metropole: Selected Poems 1980-1998 includes "The Balthus Poem".

South African novelist Christopher Hope wrote My Chocolate Redeemer around a painting by Balthus, The Golden Days (1944), which appears on the book jacket.

Stephen Dobyns' book The Balthus Poems (Atheneum, 1982) describes individual paintings by Balthus in 32 narrative poems.

His widow, Setsuko Klossowska de Rola, heads the Balthus Foundation established in 1998.