TBILISI, Georgia — Western-oriented President Mikheil Saakashvili on Tuesday conceded defeat in parliamentary elections, acknowledging the victory of a coalition led by an eccentric billionaire he has accused of being a Russian puppet.
Georgia's richest man, Bidzina Ivanishvili, 56, is on course to becoming the country's next prime minister after exit polls and preliminary results from Monday's voting handed the election to Mr. Ivanishvili's Georgian Dream coalition and a resounding defeat to the ruling United National Movement.
Mr. Ivanishvili repeatedly accused Mr. Saakashvili of authoritarianism and said his governmental reforms failed to benefit the majority of Georgians. Mr. Saakashvili countered that the opposition would return the former Soviet republic to Moscow's orbit and set the country back to the dark days of the 1990s, when war and rampant lawlessness followed independence after the collapse of the Soviet Union in 1991.
Mr. Saakashvili's political scare tactics failed to sway voters, said Iago Kachkachishvili, a professor of sociology at Tbilisi State University who conducted opinion surveys during the campaign.
"It was a constant accusation against Ivanishvili and other political leaders that they are agents of Russia, that they are agents of Putin," he said, referring to Russian President Vladimir Putin. "This whole ideological construction has failed."
As exit polls from television tipped the early results to Mr. Ivanishvili's, thousands poured into the streets of Georgian cities.
"For the first time in the history of new Georgia, people have elected who they want, and it hasn't been somehow manipulated — so finally it's happened," said Otar Lordkipanidze, who was among thousands of revelers in Tbilisi's Freedom Square on Monday night.
The election marks the first time since independence that power has transferred peaceably in Georgia.
Mr. Saakashvili, a U.S.-trained lawyer, rode a populist wave of support to power after discredited parliamentary elections in 2003.
Mr. Saakashvili's nonviolent Rose Revolution secured him as a staunch Western ally, who moved to modernize his country and adopt a foreign policy aimed at closer relations with NATO and the European Union.
Mr. Ivanishvili on Tuesday said his priority is maintaining its strategic relations with the West without antagonizing Russia, which has no diplomatic relations with Georgia.
Russia and Georgia clashed in a brief war in 2008 after Moscow supported a Georgian secessionist movement.
"We would certainly like to have [a] strategic partner, including the United States, but we also want good relations with neighbors. Neighborhood policy is our priority," Mr. Ivanishvili said at a news conference.
Meanwhile, Russia's leadership gave Mr. Ivanishvili a guarded welcome.
"We are definitely looking forward for a fresh, new nonhostile, sober leadership in Georgia," said Putin spokesman Dmitry Peskov.
Despite Mr. Ivanishvili's more conciliatory rhetoric toward Moscow, he has clearly stated that Georgia's future lies in European institutions and in NATO.
In Washington, White House spokesman Jay Carney called the election "another milestone in Georgia's democratic development."
Mr. Ivanishvili's Georgian Dream party is described as fragile and could fracture easily. His hold on power also is threatened by Georgia's complicated politics.
Under Mr. Saakashvili's reforms, Georgia is transforming into a government with a weaker president and stronger parliament.
However, Mr. Saakashvili will retain his presidency until the end of his term in October 2013. The newly elected parliament is expected to nominate Mr. Ivanishvili as prime minister, but Mr. Saakashvili has to approve the nomination.
As he conceded defeat Tuesday, Mr. Saakashvili promised to remain a political force.
"We will struggle for the future of our country. We will struggle for everything that has been created in recent years in terms of a struggle against corruption, crime [and] in terms of Georgia's modernization," he said.
Few outside of Georgia had heard of Mr. Ivanishvili until he announced his entry into politics last fall. With an estimated fortune of $6.4 billion, Mr. Ivanishvili is Georgia's richest man. The tycoon, who was raised on a farm, made his fortune in computers, banking and other investments in post-Soviet Russia.
Since returning from Russia eight years ago, he personally invested in Georgia's infrastructure and personally financed many of Mr. Saakashvili's reforms, paying the salaries of civil servants and police to help stamp out corruption.
Mr. Ivanishvili lives in a $50 million steel-and-glass mansion that overlooks Tbilisi and is known as an avid collector of art and rare animals.