Angela Merkel (int'l edition)

Only months ago, Germany's center-right Christian Democratic Union party was wallowing in a campaign finance scandal surrounding ex-Chancellor Helmut Kohl. It seemed the party, which has ruled Germany for most of the last 50 years, was doomed to suffer the fate of Britain's Conservatives after the departure of Margaret Thatcher: drifting for years in the vacuum left by their domineering leader.

Then came Angela Merkel, the CDU's secretary general. In December, she shocked party comrades by writing an article for the Frankfurter Allgemeine newspaper calling for an investigation of the campaign financing scandal. That was a clear attack on Kohl and his refusal to name contributors to a CDU slush fund. It was a risky and controversial move, but it marked Merkel in the public mind as an independent thinker willing to challenge Kohl's legacy.

Merkel's popularity soared. That alarmed members of the party Old Guard like Chairman Wolfgang Schauble and former Defense Minister Volker Ruhe, who tried to block her advance. They even held a late-night, stop-Merkel strategy session in a Leipzig beer cellar. But the days when a clique controlled the CDU were over. At a party convention in April, Merkel was swept into the top office on a wave of grass-roots enthusiasm.

The Merkel surge has been hard on CDU leaders like Schauble who thought they might be Chancellor someday. Tough luck, guys. Merkel, 45, has sparked a CDU revival no one thought possible a few months ago. Already, she has proved a formidable rival to Chancellor Gerhard Schroder in the struggle for the soul of Germany's vast middle class. If she's clever, she could restore the CDU's image as the party best able to manage the economy.

WELCOME ANTIDOTE. Merkel, with her page-boy haircut and drab suits, is an unlikely media star. But to German voters she's a desperately needed antidote to the stagnation and pomp of Kohl's final years in office. Kohl tolerated no dissent, but Merkel is encouraging many views. She's used to that in her own family. Her mother supports Schroder's Social Democratic Party, and her brother backs the Greens. But after 16 years of Kohl, the CDU isn't used to much democracy, leading commentators to warn of destructive infighting. ''Oh, we'll handle it,'' Merkel says, dismissing such predictions. ''In a world where not all the questions are answered, we need to be able to have lively discussion.''

That kind of freshness has already made Merkel more popular than Schroder. Indeed, she's a kind of politician Germany has never seen before. A pastor's daughter who grew up in the former East German city of Templin, she seems nonplussed by the attention showered on her. She still places her own phones calls, saying: ''Hello, this is Merkel.'' In her spare time she reads, walks, and gardens.

But her popularity is partly a honeymoon effect. The hard work lies ahead. Business leaders have embraced Schroder and his pro-business reforms such as tax cuts. Merkel has to convince business that the CDU instead best represents their interests. As parliament prepares to vote on Schroder's reforms, she also has to find a way for the CDU to put its mark on the package and take some of the credit. At the same time, she can't risk offending the aging, sometimes fearful middle-class voters who are the party's backbone.

NO MIRACLE. It's a challenging job. Merkel has shown some tactical savvy, demanding that Schroder cut top income-tax rates more than planned. But she doesn't yet seem quite comfortable with the world of global finance. She's not sure, for example, if people should be able to invest retirement savings in stocks. ''We should allow as many different types of investment as possible,'' she says. ''At the same time, we have to make sure that private pension plans have a solid basis.'' That kind of old-fashioned caution may be excusable for someone who spent much of her life in a communist state. But she'll have to get up to speed if she wants to challenge Schroder.

And Merkel is no miracle worker. In May elections in North Rhine-Westphalia, Germany's largest state, the CDU barely gained ground on the Social Democrats even though Merkel campaigned energetically. She has only neutralized the effect of the Kohl scandal. Still, it's a safe bet that everyone has underestimated Merkel so far. If her remarkable political instincts don't fail her, the woman Kohl once dismissed as ''that girl'' could be Germany's next Chancellor.

Patricia Hewitt (int'l edition)

Britain's first minister of e-commerce, Patricia Hewitt, is setting the agenda for Europe's Internet economy. ''Britain led the world into the first industrial revolution,'' says Hewitt, 50, who was appointed last July. ''Now, we are determined to be a winner in the second industrial revolution.''

Hewitt and the Blair government are aiming to provide Internet access to every British citizen by 2005--an ambitious target. The key, she says, will be giving consumers a choice of affordable ways to tap the Internet through computers, phones, or televisions. Hewitt is credited with the success of Britain's recent auction for third-generation mobile telephone licenses, which raised $35 billion for the Treasury. Now, she's working on a $2 billion project to wire British schools and communities.

Hewitt began her political career 17 years ago as press secretary to the left-leaning former Labour Party leader Neil Kinnock. Now, she vigorously campaigns for free competition--and, of course, the growing Net economy. ''Britain has a crucial lead,'' she says. And that's the way she intends to keep it.

Ernest-Antoine Sellière (int'l edition)

He has never held public office, but Ernest-Antoine Seillière may be the most effective political figure in France today. With tough rhetoric and a knack for grass-roots organizing, the 62-year-old industrialist has mobilized French employers to demand reforms in the country's labor and welfare systems.

Seillière is determined to overhaul the employer-financed social programs and rigid labor rules that make France one of the most expensive places in the world to do business. And he's got plenty of clout as the head of the Mouvement des Entreprises de France (MEDEF), a 700,000-member employers' group. Tall and charismatic, with a booming voice, Seillière strikes a chord with French businesspeople who fear they will lose their competitive edge unless reforms are made quickly. ''French business is changing, and Seillière has the guts and the intelligence to lead this change,'' says Michel Gurfinkiel, editor of Paris-based business magazine Valeurs Actuelles.

The Socialist government has felt Seillière's sting, too. Last fall, after he drew 40,000 employers to a protest rally in Paris, the government abandoned plans to dip into employer-paid social security funds to finance a government-ordered transition to a 35-hour workweek. More recently, he shocked the government and labor unions by pledging that employers would quit their longtime role in managing France's $268 billion-a-year social welfare system by yearend unless it is overhauled. And with union membership dwindling to only 5% of private-sector workers and 20% of public-sector workers, he is stepping up pressure on unions to agree to more flexible work rules. Seilliere says he is open to compromises with the government and unions. But, he adds, ''we are no longer willing to sit still.''

Seillière is the bluest of blue bloods, scion of a steelmaking family whose holdings date to the reign of Louis XIV. After taking over his family's business in 1976, he sold off unprofitable holdings and took stakes in fast-growing firms such as software company Cap Gemini. At MEDEF, he has pushed traditionally secretive Corporate France toward greater transparency, setting an example in April, when he disclosed the $1 million salary that he receives from his family company.

Might this gifted political organizer run for public office? Probably not. His five-year term at MEDEF, which he promises to complete, will end after France's presidential election in 2002. Meantime, it's a safe bet that France will be hearing a lot more from Seillière.

Thomas Middelhoff (int'l edition)

Every executive throws around Internet buzzwords these days. But Bertelsmann CEO Thomas Middelhoff, 47, was the first chief of a major German company to see the Net's potential. His AOL Europe venture with America Online Inc. turned Bertelsmann into one of Europe's first Net players. And his investments in startups such as Berlin-based multimedia agency Pixelpark played a vital role in Germany's venture-capital boom.

Middelhoff must redesign his Net strategy, now that the AOL's merger with Time Warner Inc. has forced him to sell his stake in AOL Europe back to AOL. But already, Germany's Netizens owe him an enormous debt.

Gabor Demszky (int'l edition)

Budapest Mayor Gabor Demszky is a rarity in Eastern Europe. Once a pro-democracy agitator, he strode into power after the collapse of communism along with scores of former dissidents and intellectuals across the region. Most failed as politicians, victims of their own idealism or ineptitude. But Demszky, 48, is now in his third four-year term. Popular among voters, he runs a booming, well-managed city.

Demszky understands that business doesn't want more from government. It wants less. Tellingly, he boasts not about how much his administration is doing, but that ''a lot more is going on without our involvement.'' The capital has snared over 54% of the $22 billion in foreign investment that has flowed into Hungary since 1990. Citibank, Unilever, and Ikea are just a few of the multinationals that have set up shop in the city, helping drive unemployment down to a low 3.2%.

Because of his popularity, Demszky would seem destined for higher office. But his party, the Alliance of Free Democrats, lacks national appeal. So for now the mayor is setting his sights on another term in 2002. If nothing else, he doesn't want to hand over the $500 million in reserves he has built up by carefully managing costs. ''I don't want to leave that to a successor so they can spend it on nonsense,'' he says. Yet another sign Demszky the dissident is still a player.

Ugur Bayar (int'l edition)

Few people get the chance to sell off $20 billion worth of state assets, especially at the tender age of 36. But Ugur Bayar can tell you all about it. A former Citibanker who heads Turkey's privatization administration, Bayar is restructuring Turkey's economy. This year, the Ankara-based graduate of the State University of New York at Stony Brook has presided over the $1.3 billion sale of half of POAS, the petroleum distributor, and encouraged more than 400,000 people to buy up 31% of oil producer Tupras. ''I'm almost worn out,'' says Bayar. More sales this year will include stakes in Turk Telecom and Turkish Airlines.

The sell-offs are essential if Turkey is to meet International Monetary Fund targets for cutting inflation and boosting growth. Pruning the state sector will also bring the country closer to the European Union.

Bayar figures the privatization program can be completed over the next five years. Meanwhile, some in Turkey think the whiz-kid Bayar, scion of a political clan that includes former President Celal Bayar, may be headed for a political career.

Hanna Gronkiewicz-Waltz (int'l edition)

Poland was an economic basket case when Hanna Gronkiewicz-Waltz became president of Narodowy Bank Polski, the country's central bank, in 1991. Inflation had topped 600% the previous year, the economy had contracted by 7%, unemployment was 12% and rising, and the banking system was on the brink of collapse.

But after nearly a decade of Gronkiewicz-Waltz's tough financial policies, the country boasts one of the most vibrant economies in Central and Eastern Europe. No wonder opinion polls consistently name Gronkiewicz-Waltz one of the country's most highly regarded public figures. She has also inspired other central bankers in central Europe to adopt her hard-money approach.

A former banking law professor, the 46-year-old Gronkiewicz-Waltz says preparing Poland for membership in the European Union is her top priority. ''When communism collapsed, it was obvious we would want to join [the EU] to guarantee our freedom and ensure our prosperity,'' she says. That means radical financial-sector reforms and painful monetary policies. But Gronkiewicz-Waltz has never buckled, despite howls of protest from politicians, trade unions, and business.

Faced with a largely insolvent banking system, she forced dozens of financial institutions to merge or go bankrupt. She curbed inflation by raising interest rates to punishing levels. When Parliament complained, she carried on regardless. The result: Poland has a robust financial system, and inflation has dropped dramatically. The economy is growing at around 6% a year. Foreign investment is expected to reach $12 billion this year.

But Poland isn't out of the woods yet. Inflation still hovers around 10%. The current-account deficit is a worrying 8.3% of gross domestic product. And while the central bank took a bold step on Apr. 12 by allowing the zloty to trade freely, the currency's gyrations since then have unsettled some investors. Poland's big challenge now is to bring inflation back down without jeopardizing growth. The solution, she says, is for the government to reduce the budget deficit. That would curb inflation and give her a chance to cut interest rates and maintain growth. Whatever happens, the long-term goal of entry into the EU still beckons.

José Bové (int'l edition)

As French folk heroes go, central casting could hardly have done better than José Bové. The 47-year-old pipe-smoking sheep farmer rocketed to fame last Aug. 12, when he and other activists were arrested for trashing the site of a new McDonald's. Bové's attack on ''la malbouffe''--industrialized bad food--struck a chord with many French who fear globalization's impact on their traditions, language, and cuisine. Later, Bové was in Seattle disrupting the proceedings of the World Trade Organization. Globalization, he says, ''is a planetary dictatorship. If you are not part of the market, you don't exist.''

A sophisticated militant who once led student strikes at his school near Paris, Bové is clearly riding the right cause at the right time. Food scares like mad cow disease have struck a nerve in the European psyche. Even though Bové's tirades against free trade are far from the mainstream, politicians are unwilling to criticize him openly. Bové is not likely to fade away soon.

Jacques Herzog & Pierre de Meuron (int'l edition)

The art world was surprised when architects Jacques Herzog and Pierre de Meuron won the commission to design the Tate Modern in London, which opened to critical raves in May. They bested better-known competitors such as Britain's Nicholas Grimshaw or Italy's Renzo Piano.

In fact, the Basel firm of Herzog & de Meuron was probably the perfect choice to convert a power-generation plant into a venue for modern art. The two 50-year-old Basel natives are known for deploying common materials in surprising ways. For instance, in California's Napa Valley, they built a winery with walls of volcanic rock encased in wire mesh. ''You don't need to read books and have visited a university to understand what's in front of you,'' Herzog says. The result is humanistic and elegant--a welcome contribution to any landscape.

Georges Frêche (int'l edition)

Among regional French politicians, Montpellier's 61-year-old mayor, Georges Frêche, stands out. While most see provincial postings as stepping stones to plum jobs in Paris, Frêche has preferred to stay put. In two decades at City Hall, he has transformed the city in southeastern France from a sleepy backwater into a hive of high-tech activity.

It was a good move. As government becomes increasingly decentralized, local politicians in France are starting to wield ever more power. And Frêche, a graduate of elite French business school Ecole des Hautes Etudes Commerciales, understood early on that in an era of globalization, it was vital to attract multinational companies to Montpellier if the region's economy was to grow.

So in 1985, the Socialist politician began pitching his city's case to investors across Europe and in the U.S. Freêhe also opened 11 business parks around the city and modernized road and air links with the rest of France and Europe.

That's why Dell Computer Corp. chose Montpellier as home for its Southern European operations and why Palm Computing Europe has its headquarters there. Also, thanks to Frêche's creation of incubator Cap Alpha in 1987, Montpellier now boasts scores of thriving high-tech outfits. This city of 238,000 is now the fastest-growing in France.

Mario Monti (int'l edition)

With his gray hair and gray suits, Mario Monti looks the epitome of a Brussels bureaucrat. But appearances deceive. The 56-year-old European Competition Commissioner, a former economics professor, is fighting fiercely to rid Europe's single market of cartels, potential monopolies, and subsidized companies.

Since taking office last September, Monti has fined shippers for operating a cartel and blocked Volvo's bid to acquire truckmaker Scania. Now, he is insisting that Germany's state governments stop guaranteeing the debt of the Landesbanken--the state-dominated regional banks. ''State aid distorts the market,'' Monti says. Politicians are already growling over Monti's moves, but the ex-academic is paying no heed. His dedication is bad news for anyone betting on European subsidies.

Jean-Pierre Zanoto (int'l edition)

If members of France's clubby business world are sleeping a bit less easy these days, it's thanks in part to a magistrate named Jean-Pierre Zanoto. The 50-year-old Marseillais is one of Europe's savviest investigators of white-collar crimes.

Zanoto has tackled France's biggest financial scandal: the multiyear fraud at once-mighty Credit Lyonnais. Documented losses from fraud and theft now top $20 billion, and the investigation has brought down bankers, former government ministers, and top businessmen around Europe. Zanoto continues to rock the Establishment. In April, he placed Jean-Claude Trichet, governor of the Bank of France, under investigation for possible wrongdoing related to Credit Lyonnais.

Zanoto prefers to shed the limelight. ''The work I do needs a certain amount of serenity,'' he says. His targets, of course, are hardly serene.