This story was updated at 3AM EST, October 3.

Stunning parliamentary election results are sending Georgia into uncharted territory for a post-Soviet state: two relatively equally balanced political forces now must learn the art of legislative give-and-take.

President Mikheil Saakashvili on October 2 conceded defeat on behalf of the party he leads, paving the way for a parliamentary power tug-of-war with billionaire opposition leader Bidzina Ivanishvili.

The president’s concession marked a dramatic fall from grace for the United National Movement (UNM), which, just a month ago, seemed poised to breeze to a solid victory in the October 1 elections. The party had encountered little or no opposition to its hold on parliament since 2004.

With just over 97 percent of the votes counted, preliminary results showed Ivanishvili’s six-party Georgian Dream coalition leading the UNM by a steady margin in the proportional voting. The Georgian Dream has a three-seat advantage over the UNM in the 73 first-past-the-post races.

The Georgian Dream is carrying 55 percent of the proportional vote, which determines the apportionment of 77 seats in the 150-seat parliament. The UNM, meanwhile, has 40.27 percent of the proportional ballots. A few small opposition parties have attracted the remainder of the vote, but none seems likely to clear the five-percent hurdle required to gain seats in the next parliament.

The Georgian Dream also is leading in 38 of the 73 first-past-the post races. Their apparent wins included seats in cities that have been the focus of considerable government reconstruction efforts in recent years, including the Black Sea city of Batumi and the central city of Kutaisi, the new seat of parliament.

As a French citizen, Ivanishvili himself, who lost his Georgian citizenship last year, will not be able to sit in parliament.

Under Georgia’s Constitution, Saakashvili will have to present a fresh cabinet to the newly elected parliament for confirmation – a situation which, given the apparently tight division of seats between the UNM and Georgian Dream, will require hard bargaining.

In a three-minute televised address to the nation, a determined-looking Saakashvili pledged that the party he helped create would continue as an opposition party to “struggle for the future” of Georgia. In comments that have particularly important implications for the preservation of stability under unprecedented circumstances, Saakashvili emphasized that he and his party would honor the official results and work within the established system.

“You know well that the views of this coalition [Georgian Dream] were and still are fundamentally unacceptable for me,” Saakashvili said. “There are very deep differences between us and we believe that their views are extremely wrong, but democracy works in a way that the Georgian people make decisions by majority. That’s what we, of course, respect very much.”

In the hours before the president’s announcement, the mood at the UNM’s all-glass national headquarters was pessimistic. In stark contrast to the day-after-the-celebration feeling at the Georgian Dream’s headquarters, signs of activity at the UNM were low, with a few journalists left watching a soap opera in a conference room.

While Saakashvili’s party is still set to hold a sizeable portion of seats in parliament, the loss of a constitutional majority marks a “national defeat” for the party, said political scientist Giorgi Margvelashvili.

“It is a defeat [for the UNM] – a national defeat after eight years of being in power,” Margvelashvili said. The party, he believes, never recovered from the scandal over televised footage of brutal prison abuse that rocked Georgia two weeks before the vote.

In the end, while both the UNM and Georgian Dream played hard and dirty during the campaign, the prison scandal turned public opinion against UNM, analysts say. The government’s efforts to respond to public outrage by replacing two ministers and allegedly firing over a dozen prison officials was too little, too late to reassure many voters.

Although Ivanishvili has sketched out his own policy plans in relatively general terms -- more jobs, better schools and healthcare, an independent judiciary, agricultural development, among other points -- addressing the problems found in Georgia’s prison system remains a priority.

In a press conference following Saakashvili’s announcement, Ivanishvili pledged “as soon as possible -- if not today, then tomorrow --” to replace all the prison guards allegedly involved in the torture of prisoners.

He also promised to put his money where his mouth is, telling reporters he would look for “legal means” to put funds from his own estimated $6.4-billion fortune into the state budget.

Correcting Georgia’s ongoing financial and unemployment problems was an incentive for many voters to head to the polls. Voter turnout stood at 60.8 percent of the roughly 3.6 million registered voters, compared with 53.9 percent in the 2008 parliamentary elections.

In one area that seems sure to invite political tension with the UNM, Ivanishvili indicated the Georgian Dream coalition would work to improve relations with Russia. Tbilisi and Moscow have not been on speaking terms since their 2008 war. “It is hard, I understand, but not impossible. I will do everything to make this possible," Ivanishvili said, referring to the normalization of ties with the Kremlin. At the same time, he said, a Georgian Dream government would continue to strive for NATO membership for Georgia. "Our strategy will not change. Not only ours, but that of the Georgian people," he said.

Given its apparently narrow parliamentary majority, as well as the broad philosophical differences evident among its coalition members, Georgian Dream’s easiest path towards governing effectively would seem to encourage it to try to find common ground with the UNM. But Ivanishvili’s initial comments indicated he wanted to distance the coalition from the UNM, not engage it.

Despite a tense race, the voting was largely calm and free of major violations, reported Tamar Chogishvili, chairperson of the Georgian Young Lawyers Association (GYLA) and one of the local observers for the elections. [Editor's Note: The Georgian Young Lawyers' Association receives funding from the Open Society Georgia Foundation. EurasiaNet.org is financed by the New-York-City-based Open Society Foundation, a separate part of the network of Open Society Foundations.]

GYLA and other observers have officially requested that the results from six voting precincts from Khashuri, a small town in central Georgia, be abolished after police allegedly stormed the stations during the vote tabulation. The Interior Ministry has denied any wrongdoing.

But Chogishvili stressed that this violation, as well as other irregularities, will not be enough to “dramatically” influence the vote.

International observers also agreed that the vote had largely been a success for the country.

Luca Volontè, head of the delegation from the Parliamentary Assembly of the Council of Europe, part of the mission from the Organization for Security and Cooperation in Europe, told journalists on October 2 that, “despite shortcomings,” Georgia had “passed the test” for democracy.

The polarized pre-election climate, lack of objective media coverage, and a “blurred line” between the government and the governing party were all faults sited by the international observers in their preliminary report. A final document is expected by mid-December.

“The political forces elected to the new Parliament, both in the majority and opposition, should now take up their responsibilities and work together to address these shortcomings for the further democratic development of the country,” the observers advised.

During his concession speech, Saakashvili attempted to underline such a commitment to democracy. “We will struggle for everything what has been created in recent years… to preserve them for future generations and to further develop Georgia,” he said.

That attitude prompted political scientist Margvelashvili to characterize the vote as a victory for the nation – “to peacefully change the government” via elections.

“Never, ever again will Georgia have a uni-party system,” he said. “This is a historic success.”