Polls have closed in Georgia, the small Caucasus Republic that took center stage in the 2008 presidential campaign when Russian troops poured over the border there and threatened to topple the country's pro-American government. With bothsides claiming victory, the country of 4.5 million people may once again feature prominently in an American presidential campaign.

Georgia's pro-American government led by Mikhail Saakashvili is again on the brink, but this time it looks to have been defeated at the polls, even as it seems set to hold onto a slim majority in parliament. The challenger, billionaire oligarch Bidzina Ivanishvili and his Georgian Dream coalition, have promised to reorient the country and to bring about a rapprochement with Moscow. Ivanishvili, who made his nearly $7 billion fortune in Russia, has been accused by Saakashvili's party of being a Russian stooge. And indeed he has close ties to Vladimir Putin and remains the largest private shareholder in Russian gas-giant Gazprom.

Ivanishvili has battled against these accusations and accused Saakashvili of turning the small country into his own authoritarian fiefdom. The election campaign has been vicious, as Ivanishvili has spent lavishly on foreign consultants and lobbyists and engaged in behavior that appears at best to look like vote buying in a country with a GDP smaller than his own personal fortune. Likewise, the government has cracked down on opposition activists and went so far as to strip Ivanishvili of his citizenship before making an exemption to the law that allowed Ivanishvili to stand for election.

There is dwindling hope of a popular vote win for Saakashvili’s party, which faces a late surge by the opposition after a prison abuse scandal came to light in the campaign’s final days. Independent exit polls conducted by American and European firms show Ivanishvili’s opposition in the lead: Germany's GFK has it 33 percent to 33 percent, and American exit polling firm Edison has it 50 percent to 41 percent for the opposition. (Final vote tallies will not be completed until tomorrow.)

Still, the dynamics of the parliamentary system in Georgia may allow the governing party to hold a majority even if it loses the popular vote (Canada's election in 2011, in which the Conservative party there won 53 percent of the seats with just 40 percent of the vote, is one example of this quirk), but any victory for Ivanishvili will rightly be interpreted as a major blow to the last of the color revolutions that Moscow has worked so diligently to undermine. And there can be no doubt that the Obama administration, which has kept Georgia at arms length as part of its 'reset' with Moscow, will own some of the blame if Moscow finally achieves the regime change in Georgia it failed to pull off in 2008. Obama has ceded the Russians a sphere of influence in their near abroad in exchange for the New START agreement and other marginal concessions, and the Russians have gotten smarter—aiming to undermine emerging democracies like Georgia in subtle ways.

The great irony of course is that a win by the opposition will at once validate Georgia's young democracy and possibly destroy it. For all the talk about creeping authoritarianism in Georgia by the American left (which has always resented Georgia as a project of the Bush administration), the Saakashvili government has built a functioning state where there was once a failed state, and a genuine democracy where there was once just autocratic, Soviet-style corruption.

But the worst may be yet to come. Both sides are already claiming victory. If the exit polls hold up and the opposition does win a majority of the popular vote while the governing party claims a slim majority in the parliament, Ivanishili and his allies have threatened to take their campaign to the streets. Russian troops remain just a hop, skip and a jump from Tbilisi, the Georgian capital and there is the real potential for violence—with or without a Russian incursion.

Georgia is a country with thousands of troops serving alongside U.S. forces in Afghanistan. If the wheels come off, and if things turn violent, the Obama administration will need to take a clear stand for the rule of law—even at the risk of alienating their friends in Moscow.

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