Will Georgia see a peaceful transfer of power? (+video)

Tycoon set to become premier

Defeat for Saakashvili's United National Movement (UNM) followed criticism that he has monopolised power, mistreated opponents and trampled on rights and freedoms. Video footage of torture, beatings and sexual assault of prison inmates, aired by opposition channels before the election, had led to protests.

"Justice has been restored," said Nino Kantaria, 42, in Tbilisi. " I believe that Bidzina will make our lives better."

But Zaira Khabuliani, another resident of the capital, said she was unsure of the opposition's ability to govern.

"I don't know how Ivanishvili will behave and what he will do for people."

Ivanishvili, a once reclusive businessman who built his $6.4 billion fortune in Russia, said he was confident of becoming prime minister.

Saakashvili had said Georgian Dream would move the country of 4.5 million away from the West and back into Moscow's orbit, suggesting Ivanishvili would do the bidding of the Kremlin.

"We'll do our best to sort out relations with Russia," Ivanishvili, 56, told reporters, but added: "Our main aspiration is Europe and our security is NATO."

In Tbilisi, two U.S. senators met Ivanishvili and congratulated the Georgian people on the election.

"We discussed at length how important the relationship is between Georgia and the United States of America, and we look forward to ... continuing to build that relationship," Republican Senator Jim Risch of Idaho said.

"We are good friends, we want to continue to be good friends," he said, standing beside Ivanishvili.

Governing Georgia could be much harder as, until Saakashvili's term ends next year, he will no longer have a compliant parliament and he will have to work with Ivanishvili.

Saakashvili accepted the will of the majority but said some of Georgian Dream's views were "fundamentally unacceptable" and saw "very deep differences" with the coalition.

Under reforms that take effect after a presidential election next year, the authority of the head of state will be weakened and more power will go to parliament and the prime minister, who will become the most powerful executive official.

Ivanishvili set out plans he would pursue as premier, saying a balanced budget would be a priority.

U.S.-educated Saakashvili curbed corruption and presided over an economic resurgence, but the war set back efforts to bring Georgia into NATO and gain control over the Moscow-backed breakaway regions of South Ossetia and Abkhazia.

The economy has grown again after contracting in 2009, hit by the war and the global economic crisis, but the official unemployment rate of 16 percent is considered to be an underestimate, and many Georgians struggle to pay bills.

"Of course, there have been problems. High utility tariffs, unemployment," said Alexander Begiashvili, who backed Georgian Dream. "A man lives only once and wants to have a good life."

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