THE ASIAWEEK POWER 50:

Michel Camdessus and the International Monetary Fund, which he has headed for the past 11 years, now make decisions that some 300 million Asians have to live with. Including some Asian leaders who would prefer to make those decisions themselves, thank you very much. They still have political and firepower, of course. But in the year of The Crisis, economic clout matters more. If you have it, your politics can be forgiven (think Taiwan President Lee Teng-hui, number eight, and his dollar diplomacy). You can single-handedly change perceptions about a country (think George Soros, number 12, and his promised $1 billion investment in South Korea). If you have it, the last word is always yours. And no one commands as much money power as Camdessus. One hundred and ninety-five billion dollars worth at last count.

The crisis and the Fund. They have daunted even the most powerful politicians and executives, they have upset the hierarchy. The main business of more than a few governments in Asia has been to make people rich, or at least better off. But years of progress were undone in a matter of weeks, undermining leaders' legitimacy. Some are dealing with that better than others. South Korean President Kim Dae Jung (number four) and Thai Prime Minister Chuan Leekpai (number 13), to name some. They have accepted the unpleasant truth: they cannot control their nations' destinies. Malaysian Prime Minister Mahathir Mohamad (number 10) and Indonesian President Suharto, to name others. They are in denial. Mahathir is embittered; Suharto is embattled. Just two years ago Asiaweek ranked him the region's most powerful person. In Indonesia there used to be no one but Suharto. Now people want anyone but Suharto. His fall from grace was so quick it surprised even his most enduring critics. The president's authority is so diminished, and the situation in Indonesia so volatile, that Suharto fell right off this year's list. Power is fragile, especially when in the hands of just one person. Twenty others dropped from our ranking too. Throughout Asia, leadership has never been so critical or so difficult. First because of the crisis, then because of the Fund.

The IMF's influence is unmatched. Others have (some) money to lend or spend. But the Fund is the only one with the authority, some would say arrogance, to require nations in crisis to reform their entire economic systems in a matter of months. Singapore Prime Minister Goh Chok Tong (number seven) promised Indonesia $5 billion. But did he insist on more openness? Japanese leader Hashimoto Ryutaro (number 17) pledged $10 billion to South Korea. But would he mention the need for more transparency? Would Chinese President Jiang Zemin (number two)? Of course some of the IMF tenets championed by Camdessus are severe: higher interest rates and lower government spending are making life difficult for millions. There is no guarantee that these policies are right for Asia. If they are wrong, we're all in trouble. But the IMF's word holds sway.

No other organization could prompt Mahathir to say: "We try to follow not because we think the IMF is right, but because if we don't then there will be a loss of confidence." Malaysia, of course, has very definitely not asked the Fund for money. But Mahathir has imposed his own "IMF" program nonetheless. Politicians everywhere know what the Fund expects. Even Chinese Prime Minister Zhu Rongji (number three) has set priorities - cleaning up the country's messy banking system and closing down unprofitable state enterprises - that would please Camdessus.

He and the IMF are in our face. Fund officials are monitoring Indonesia daily. Manila asked the IMF to continue surveillance, even though the Philippines could have ended its 35-year program in March. Camdessus publicly approved of Malaysia's actions to strengthen its banking system and lectured Japan on its economic shortcomings, never mind that Tokyo had not asked for IMF assistance. In South Korea, people talk about the IMF era, as in "can't do that, this is the IMF era." They shop at IMFashionable sales, eat IMF burgers (for just half a dollar), wear Overcome IMF jeans, visit IMFine karaoke bars and open IMF bank accounts (deposit $1,000 to revive the IMF economy).

Camdessus's political clout in the region is unrivaled. Who else could (or would) insist that leaders end corruption, cronyism and collusion in their countries? No one else could (or would) cross his arms and stand over Suharto as he signed an agreement. Under Camdessus's guidance the Fund has reached into territory that used to be off limits: labor markets, banking rules, competition policy. This was once the domain of national leaders. Not anymore. Maybe the IMF has gone too far, has operated with little supervision (except from its biggest contributor, the United States) and even less accountability. Certainly many would like the Fund to mind its own business: lending money to troubled countries when no one else will. But for now, if Camdessus wants to restructure an entire continent, no one can stop him.

It wasn't supposed to be this way. But the world as we knew it vanished in July 1997. As the former governor of Indonesia's central bank, Sudradjad Jiwondono, says: "We were building a sand castle that we thought could withstand attack. But we were hit by a tsunami." The full force of the no-boundaries, 24-hour, computerized, for-profit financial markets crashed onto Asia's shores. Currencies were battered, floated and sank. Local and foreign investors panicked, lost confidence. Banks were declared insolvent and businesses still cannot pay their debts. On paper, Asia's public companies lost some $700 billion. Money was sucked out of the region, wealth was washed away and leaders were left with little ground to stand on. The sand castles crumbled. It was unprecedented, mostly unexpected, definitely unwelcome.

Governments could see the benefits of opening the flood gates to international bankers and fund managers, and they weren't wrong. Globalization served them well, at first. Billions of dollars flowed into Asia, annual growth rates of 8% were common, even expected. Leaders naturally took credit for their countries' new wealth; economic clout conferred more political power. There was a price, though: nations were vulnerable to speculators, flighty investors and unyielding bankers. Shoring up financial systems and regulations at home might have provided some protection. But few bothered. Then, you could say, the tide turned.

Investors overreacted. It happens. But that is not to say that all their worries were overstated. For years the going was too good to ask too many questions. Bankers offered easy money, were too close to politicians and kept problems quiet. Investors didn't know enough; they bought the stocks, bonds and the hype. Executives borrowed too much and expanded too far. No one kept close enough tabs on the financial system. It was part conceit, part complacency. It was "irrational exuberance," says Stanley Fischer, second-in-command at the Fund. It was natural. Critics were ignored. Now, of course, governments have to obey the sternest critic, the IMF. They have to undergo the severest reforms, and in short order, to win the IMF's seal of approval. Without it they would be branded basket cases. Even with it, they are in recession.

This dependence is unsettling. Consider Mahathir's words in March: "This crisis is a challenge [for me] because the power is not in this country. If it were something in this country, I can manage. It is elsewhere, outside my reach." Or those of Surachai Sirikai, a political science professor at Thammasat University in Bangkok: "We don't have any bargaining power. I am concerned about our society after the IMF has finished with us." Or those of Mohamad "Bob" Hasan, a Suharto crony: "This is the Republic of Indonesia, not the IMF Republic."

Sovereignty just isn't what it used to be. This may be most obvious in Asia today, but it is evident everywhere. Few countries can afford to cut themselves off from global trade and capital flows. Look at Myanmar, or North Korea. But when nations integrate themselves into the system, their leaders have to surrender some control. This is as true for Thailand's Chuan and South Korea's Kim as it is for U.S. President Bill Clinton, British Prime Minister Tony Blair and Russian President Boris Yeltsin.

Like it or not, power has shifted from national capitals, and there is no going back. The Asian economic crisis is very political. It exposed cronyism and collusion between governments and businesses; it emboldened citizens to call for open economies and clean leaders. What was once tolerable is now unacceptable. In Thailand, Chavalit Yongchaiyudh's administration fell four months after the baht crashed. South Korea's ruling party was defeated in December's scheduled elections, just after Seoul negotiated a $57-billion bailout by the IMF. And Japan's own economic troubles made it possible for Tokyo's former public prosecutor, Kumazaki Katsuhiko (number 14), to arrest some of the nation's most elite bureaucrats and bankers on corruption charges this year.

Asia's transformation will be painful. Maybe it is occurring too abruptly. But it is not entirely forced. South Korean legislator Han Seung So says: "Asia would have assimilated to the Western model. But it will happen more quickly because of the IMF." In the Philippines, former finance minister Ramon del Rosario says: "Even when an administration supports reforms, it is useful to point to the IMF as a culprit because economically sound policies can be politically unpopular."

Of course, you can find people who would call the IMF a culprit in the crisis. Or an opportunist. Or a con artist. "The IMF has been able to perpetuate the illusion that its programs have been successful," says Solita Monsod, former Philippine economic planning secretary. Which is precisely the point. It is not just the cash. It is that everyone knows the IMF's money only comes with conditions. The Fund is powerful because it can create confidence. While Asia's leaders no longer can. This year Michel Camdessus has the last word.