(FORTUNE Magazine) – With a landslide victory in a hastily arranged election in early September, Japanese Prime Minister Junichiro Koizumi won a broad mandate to push his reform agenda for the world's second-largest economy. But the Far East is hardly the only place where free-market reform is afoot. As FORTUNE went to press, conservative candidate Angela Merkel was polling ahead of incumbent Gerhard Schröder in Germany's race for chancellor. Merkel was promising to push for a less paternalistic form of capitalism in Deutschland and floating the idea of a flat tax. No matter who prevailed, the stage is set for reform. As her top economic advisor recently said: "We will smash tax barriers with a big sledgehammer." Another member of Old Europe is also on the cusp of change. French President Jacques Chirac is ailing and increasingly viewed as irrelevant. That might well open the door for former Chirac protégé turned capitalist reformer Nicolas Sarkozy to sweep into office in 2007. -- Peronet Despeignes