By Matthew Collin BBC News, Tbilisi

Mr Saakashvili hopes for an outright win in the first round

The picturesque old town of Tbilisi lies under a soft blanket of snow as Georgians celebrate Orthodox Christmas.

But although the city resembles a winter scene from a seasonal greetings card, it has also been the backdrop for a bitter struggle for power in a deeply polarised political atmosphere.

All sides agree that the battle for the Georgian presidency is decisive for the country's future.

When President Mikhail Saakashvili's government ordered riot police to use tear gas and rubber bullets to break up opposition protests two months ago, it had huge resonance in a society which still remembers the brutal Soviet crackdown on independence demonstrations in 1989.

But Mr Saakashvili ran a slick, high-profile, lavishly-funded campaign. It was on a scale unprecedented in Georgia, taking his message to places where some people felt he had neglected them while he pushed through radical free-market reforms. He wanted to show he was listening to his nation.

'Successful' reforms

Mr Saakashvili told the BBC he understood some people had suffered since he came to office, but insisted Georgia was on the right track economically.

Georgians are marking Orthodox Christmas

"Every central European country went through painful reforms, and Georgian reforms have been particularly successful and particularly spectacular from many points of view, because we've come all the way from being a failed state to being the darling of the World Bank and other international institutions," he said.

The opposition was trying to capitalise on discontent about poverty, which remains widespread despite signs of economic development since the Rose Revolution in 2003 which swept Mr Saakashvili to power.

Nine opposition parties which led the protests nominated wine producer Levan Gachechiladze as their candidate, and sought to portray Mr Saakashvili as an authoritarian who had abused the rule of law. But they could not match either the resources or the sheer energy of the powerful Saakashvili campaign.

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There was also a wild-card candidate, the oligarch Badri Patarkatsishvili, who has vowed to use all his millions to oust Mr Saakashvili.

At the height of the election campaign, the authorities released surveillance tapes which they alleged showed the tycoon conspiring to stage a coup. He denied this and released his own secretly-recorded tapes, claiming the interior ministry was plotting to murder him.

Nato ambitions

This election was important for Georgia's ambitions to forge closer links with Europe and win Nato membership, which it sees as a guarantee of its security amid its ongoing disputes with neighbouring Russia.

The Georgian government wanted to prove that it was developing democratically, as it seeks to progress to the next stage on the road to Nato membership at a crucial summit in the spring. Some analysts have suggested that Mr Saakashvili's crackdown on protesters seriously damaged Georgia's chances.

Thousands of opposition protesters disputed the result

Meanwhile Georgia's Nato ambitions have further angered the Kremlin, which does not want the Western military alliance to extend its reach further into the former Soviet Union.

Moscow has imposed economic sanctions, hitting the fragile Georgian economy.

Georgia is also strategically important for the West. It is a vital transit route for oil and gas, with two major pipelines taking energy supplies from the Caspian Sea to Western markets.

Stability in this volatile region is a concern for Western interests. The analyst Alexander Rondeli of the Georgian Foundation for Strategic and International Studies told the BBC that it was also a concern for Georgians, who have gone through years of post-Soviet chaos and civil war.

"With a Saakashvili presidency, one can talk about predictability, one can talk about a strong president - not always wise, not always balanced, but pro-Western, dynamic and emotional. Without it, we could have uncertainty, both political and economic," he said.

"That's because the opposition is not strong. They are united only in their wish to get rid of Saakashvili."

International approval

International election observers from the Organisation for Security and Co-operation in Europe (OSCE) initially judged the election to be "essentially democratic" despite significant problems. But the opposition quickly and abrasively rejected their assessment.

"The international observers have got no guts," one of the opposition coalition leaders, Tina Khidasheli of the Republican Party, told the BBC.

"The Georgian people said no to Saakashvili and we are not going to let him steal the vote. Whatever international society will say, it's important, it's interesting, but what matters is the will of the Georgian people."

The country's next president now faces the challenge of healing the divisions within Georgian society, while preparing for parliamentary elections later this year, which are likely to be held amid continuing political tensions.