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Billionaire tycoon claims surprise victory as key US ally Georgia votes

Georgy Abdaladze / AP

Billionaire and opposition leader Bidzina Ivanishvili, left, and his wife Ekaterine Khvedelidze pray in a church in Tbilisi, Georgia, on Monday.

Updated at 1:30 p.m. ET: One of the world’s richest businessmen claimed to have inflicted a surprise narrow defeat on the incumbent pro-Western party in Monday’s elections in Georgia, a key ally of the United States neighboring Russia.

Billionaire tycoon-turned-politician Bidzina Ivanishvili claimed his opposition political alliance Georgian Dream had staged a remarkable upset and was heading for control of the former Soviet republic's parliament.

However, incumbent President Mikheil Saakashvili insisted his United National Movement was on course to retain power.

Reports said thousands of Georgian Dream supporters had gathered in the capital, Tbilisi, as the polls closed at 8 p.m. local time (12 p.m. ET). AFP journalist Paul Gypteau wrote on Twitter that the capital's Freedom Square was full with "cheering" people, while International Young Democrat Union observer Katrina Rice posted pictures showing crowds in the streets.

Rival claims could open the way to a post-election standoff. Any instability would worry the West because of the Caucasus country's role as a conduit for Caspian Sea energy supplies to Europe and its pivotal location between Russia, Iran, Turkey and Central Asia.

Ivanishvili, 56, is a once-reclusive investor and philanthropist listed by Forbes as the 153rd richest person alive having made a fortune, estimated at $6 billion, from investments across the border in Russia.

Voters on Monday chose between him and Saakashvili, a pro-Western leader who swept to the presidency after the bloodless Rose Revolution of 2003 and fought a five-day war with Russia in 2008.

The new parliament’s 150 seats consist of 73 directly-elected constituency representatives and 77 nominees allocated from party lists based on overall share of the popular vote.

Reuters reported that one exit poll predicted Georgian Dream was ahead in the constituency vote while the UNM said it believed it had done well in individual constituencies.

Nicholas Clayton, editor of Kanal PIK TV English in Tbilisi, posted on Twitter that early exit polls were so far in the opposition's favor.

Living in a palatial $50 million glass residence overlooking Tbilisi, Ivanishvili previously used his wealth - equivalent to half the GDP of the country he hopes to run - to support local arts and culture before deciding to enter politics. His supporters say Saakashvili’s regime remains undemocratic despite post-Soviet-era reforms, with undue government pressure on courts and control of the media. Video footage showing the abuse and rape of inmates at a prison in the capital, Tbilisi, has boosted the alliance.

Kremlin stooge?
Along with supporters, he has been pressing his case in Washington by spending more than $1 million in recent months on a U.S. lobbying campaign, according to a Washington Post report citing disclosure records.

Saakashvili, 44, argues voters should choose the West-leaning agenda – it has close relations with NATO - and his supporters accuse Ivanishvili of being a Kremlin stooge that would allow the former Soviet outpost to be dominated by Russia.

Voting in the election, which got under way at 12 a.m. ET, was brisk, with lines forming outside several polling stations in the capital Tbilisi, a Reuters correspondent observed.

David Mdzinarishvili / Reuters

Georgia's President Mikheil Saakashvili talks to the media at a polling station during the parliamentary election in Tbilisi on Monday.

"Besides being a contest for parliament, it is also a shadow leadership election," said Thomas de Waal, a Caucasus expert at the Carnegie Endowment for International Peace in Washington. He said the vote "marks a turning point for Georgia".

The Washington Post on Monday said Saakashvili was facing "a serious challenge" and described the electon as "deeply polarizing."

The West wants a stable Georgia because of its role as a conduit for Caspian Sea energy supplies to Europe and its pivotal location between Russia, Iran, Turkey and Central Asia.

"Political leaders should be chosen through the ballot box and not on the streets," parliamentary delegation heads from the Organization for Security and Cooperation in Europe, the Council of Europe, NATO and the European Parliament said on Saturday.

"The most important thing is that those who are dissatisfied should not create disorder," said voter Yelena Kvlividze, 45.

The prison abuse video, aired on two channels opposed to Saakashvili including one owned by Ivanishvili, has undermined the president's image as a reformer who imposed the rule of law and rooted out post-Soviet corruption.

"I'm voting against violence and abuse - how can I do otherwise after what we have all seen on TV?" Natela Zhorzholia, 68, said outside a polling station at a school in the capital, Tbilisi. She said she would vote for Georgian Dream.

Ivanishvili hopes the scandal will convince swing voters that Saakashvili has become an undemocratic leader who tramples on rights and freedoms. 

Human Rights Watch also said Wednesday that Saakashvili's government had used 90-day prison sentences against protesters and political activists, a situation it said “violates the country’s international commitments to safeguard against arbitrary detention”. Earlier this year, it issued a report slating the lack of due process and fair trial rights for those accused of “administrative offenses” such as minor breaches of public order.

'Peace and stability'
Many Georgians just want political and economic stability. The economy, hit by the 2008 war and the global financial crisis, has been growing again since 2010 but inflation is likely to hit 6-7 percent this year.

"I voted for peace and stability," said Georgy Ugrekhelidze, 76. "I want this government to carry out what it has started."

Elected in 2004 after the Rose Revolution protests toppled president Eduard Shevardnadze, a former Soviet foreign minister, Saakashvili cultivated close ties with Europe and the U.S. and sought to bring Georgia into NATO.

He curbed police bribe-taking, made frequent power outages a thing of the past and presided over an economic resurgence. But opponents say he has curtailed democracy, persecuting opponents, and he faces criticism for leading Georgia into the 2008 war with Moscow in which Russian forces routed his army.

In a recent analysis of the campaign, Shaun Walker of the U.K.'s Independent newspaper wrote:

Saakashvili's people talk of a thriving democracy knocking on Europe's door, with the old Soviet mentality erased by efficient reforms and replaced with an effervescent meritocracy. Ivanishvili's brigade declare Georgia a totalitarian state, controlled by a ruthless cartel of a few men around Saakashvili who have scooped up all the economic and political resources for themselves, control the majority of media and are painfully sensitive to even the smallest criticism. The truth, unsurprisingly, is somewhere between the two extremes.

In a blog posted on the Financial Times website, Georgia analyst Michael Cecire observed that Saakashvili's reforms have turned Georgia from one of the most corrupt of the ex-Soviet regimes to the least in the space of less than a decade through measures such as the decision in 2005 to sack the entire traffic police force and replace it with university graduates. 

Georgia is one of 15 former republics of the Soviet Union that gained independence when country the fell apart in 1991. The Soviet collapse ended nearly two centuries of almost continuous dominance of Georgia by Russia and the Soviet Union. 

Tension with Russia erupted into a five-day war in August 2008, when Saakashvili's government launched an offensive on South Ossetia. Russian forces drove Georgian forces out of the region and penetrated deep into Georgia before withdrawing. 

Umit Bektas / Reuters

View images of victims, soldiers and world leaders embroiled in the Georgia conflict.

Other parties include the Christian Democratic Party, led by former journalist Georgy Targamadze, which calls for a greater role for the dominant Georgian Orthodox Church. 

Reuters contributed to this report.

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