Georgia's President Mikheil Saakashvili has admitted defeat in parliamentary elections to a coalition led by a tycoon promising to ease tensions with Moscow.
He said the Georgian Dream bloc of billionaire Bidzina Ivanishvili had won Monday's election.
Russian Prime Minister Dmitry Medvedev, who was president and commander-in-chief when Georgia lost a disastrous war with Russia in 2008, expressed hopes that the result would improve the relationship between the countries.
Mr Saakashvili's acceptance that his ruling party will go into opposition increased the chances of the country's first peaceful transfer of power between rival parties since the Soviet Union collapsed in 1991.
However Reuters reports it could lead to an uneasy cohabitation between Mr Ivanishvili, who is likely to become prime minister, and Mr Saakashvili, who does not step down as president until next year.
The country is a conduit for Caspian Sea energy supplies to Europe and has a strategic location on the Black Sea between former Soviet master Russia and Iran, Turkey and central Asia.