Editorial: Georgia's democratic milestone

The President of Georgia's admission of his party's defeat, after a bitterly fought election against the opposition Georgian Dream, is quite a milestone. By giving way gracefully (so far, at least), Mikheil Saakashvili is playing a part in his country's first democratic transfer of power in the two decades since the collapse of the Soviet Union. Nor does the optimism end there. Independent monitors have judged the vote free and fair, and threats of unrest on the streets have not materialised.

So far, so good. But there are three sizeable challenges for Bidzina Ivanishvili, the multi-billionaire businessman who will now become Georgia's Prime Minister (and, in complex constitutional changes, will take over much of the president's power over the coming year).

First, Russia. Mr Ivanishvili wants to rebuild relations with Moscow after the war between the two countries in 2008. Georgia has much to gain from a less frosty relationship with its vast neighbour, not least as regards trade. But the new leader must first disprove sceptics' claims that he is a Kremlin stooge who will drag his country back to its enfeebled and crime-ridden past. He must also resist demands from some of his political allies that Tbilisi back away from closer ties with Europe.

Second, reforms. Mr Saakashvili clamped down on corruption, increased state revenues, improved public safety, and built infrastructure. Mr Ivanishvili must now push ahead with his promises to depoliticise the police, military and judiciary.

The biggest test of all, however, will be the economy. Under Mr Saakashvili, Georgia's GDP has more than trebled in size, but the benefits of such spectacular growth rarely trickled down to the poorest sections of society, and unemployment remains unsustainably high. Mr Ivanishvili's newfound popularity will not last long unless he can create jobs.

The peaceful transfer of power is an undoubted victory for Georgia's fragile democracy. But it is only the first step.