Prime minister’s choice set to take Georgian presidency

As Georgia prepares to hold a presidential election tomorrow, most of the chatter in Tbilisi is not about who will win, but whether Mikheil Saakashvili, the outgoing leader, will have to swap life in a palace for jail.

A firebrand pro-western politician who swept to power almost a decade ago after the Rose Revolution, Mr Saakashvili is stepping down, prevented by Georgian law from serving a third term in office.

Credited with transforming Georgia from failed state to an island of democracy in the former Soviet Union during the early years of his rule, he has grown increasingly autocratic since leading Georgia into a disastrous war with Russia in 2008 that cost his country one fifth of its territory and sent foreign investors flying for cover.

The writing has been on the wall for Mr Saakashvili and his allies since Bidzina Ivanishvili, a reclusive billionaire who made his fortune in Russia in the 1990s, emerged from the shadows to enter Georgian politics two years ago. Eccentric even by Georgian standards, Mr Ivanishvili is famous for his menagerie of exotic beasts and his futuristic glass mansion nestling in the hills above Tbilisi.

A combination of management skills and money – his estimated $5 billion fortune is equivalent to about a fifth of Georgia’s GDP – helped him unite Georgia’s fractious and fragmented opposition, a feat most observers had thought impossible.

The Georgian Dream coalition, named after a song by Mr Ivanishvili's rapper son, won a surprise victory over the ruling United National Movement in a parliamentary election last October.

As prime minister, Mr Ivanishvili has overseen constitutional changes initiated by Mr Saakashvili to clip the powers of the presidency and transform Georgia into a parliamentary democracy.

He doesn’t want to be president though. Instead he has put forward his confidant, Giorgi Margvelashvili, a philosopher-turned-politician little known in Georgia until this year, to run in the election. With typically barbed wit, Mr Saakashvili has compared the move to the fabled appointment by Roman emperor Caligula of his favourite horse to the Senate 2,000 years ago.

Opinion polls indicate that Mr Margvelashvili will win the election as he holds a decisive lead over the National Movement's Davit Bakradze and Nino Burjanadze of the Democratic Movement. So confident is he of victory that he has pledged to drop out of the race if the vote goes to a second round. The question is, what comes afterwards.

Mr Ivanishvili is committed to following the liberal course set after the Rose Revolution and pursue Georgia's integration with the European Union and Nato. At the same time, he wants to cure Georgia's toxic relationship with Russia and build constructive ties with his country's powerful northern neighbour. It is going to be a difficult balancing act.

The main stumbling block in Russian relations is the fate of Georgia’s breakaway regions recognised by the Kremlin as independent after the 2008 war.

Thousands of Russian troops are stationed little more than 100 miles from Tbilisi protecting the borders of South Ossetia and Abkhazia.

With Mr Saakashvili's days in power numbered, Russia has begun to show signs of compromise on economic matters. Moscow health inspectors recently lifted a six-year ban on imports of Georgian wine and mineral water.

Most observers believe Russia will avoid any move that might destabilise Georgia until after the 2014 Winter Olympics that are being held in Sochi, a few miles north of the Abkhazian border next February.

That gives Mr Ivanishvili, who plans to attend a European Union summit to promote Georgia’s membership of the EU Eastern Partnership next month, a bit of breathing space. There is a risk though that the EP bid could fail if the new Georgian leadership seeks to consolidate power by taking revenge on Mr Saakashvili.

A warning this week by Mr Ivanishvili that the former could face prosecution under multiple charges drew immediate rebuke from EU officials visiting Tbilisi to discuss the European Partnership. "Politically motivated justice has no place in modern Georgia," said Radek Sikorski, the Polish foreign minister.

Mr Ivanishvili has pledged to withdraw from politics at the end of the year and name an “interesting” candidate to succeed him as prime minister. There is a danger that without his stewardship, the Georgian Dream coalition could come unstuck, igniting fresh political turmoil.

Political feuding over the last 12 months has already taken a toll on the economy, with growth rates below 2 per cent.

Beyond the European-style wine bars and posh shops in central Tbilisi, most Georgians struggle to eke out a living.