Georgia's Saakashvili challenged in parliamentary vote
* President's party challenged by billionaire's coalition
* Prison abuse scandal heightens tension before vote
* Parliament to gain more power in ex-Soviet republic
By Margarita Antidze
TBILISI, Oct 1 (Reuters) - Georgians elect a parliament on Monday with tension high after a prison abuse scandal that has turned the vote into the biggest test of President Mikheil Saakashvili's grip on the Caucasus Mountain nation in nearly a decade in power.
Saakashvili, a pro-Western leader who swept to the presidency after the bloodless Rose Revolution of 2003 and fought a five-day war with Russia in 2008, hopes to head off a challenge led by a once-reclusive tycoon with a fortune nearly half the size of the former Soviet republic's economy.
He must step down after a presidential vote next year, when constitutional changes will weaken the role of head of state giving more power to parliament and the prime minister.
That may give Saakashvili, 44, a way to remain in charge of the country of 4.5 million, an important gas and oil transit route to the West, if his United National Movement retains its dominance of parliament.
Many Georgians just want political and economic stability. The economy, hit by the 2008 war and the global financial crisis, has been growing again since 2010 but inflation is high again and is likely to hit 6-7 percent this year.
For Saakashvili's main rival, billionaire Bidzina Ivanishvili, the election is a high-stakes election debut.
"Besides being a contest for parliament, it is also a shadow leadership election," said Thomas de Waal, a Caucasus expert at the Carnegie Endowment for International Peace in Washington. He said the vote "marks a turning point for Georgia".
Ivanishvili, 56, and his six-party Georgian Dream movement face an uphill battle to wrest control from the ruling party, but grim video footage showing the abuse and rape of inmates at a Tbilisi prison has increased their chances.
The video aired on two channels opposed to Saakashvili, one of which is owned by Ivanishvili, and has undermined the president's projected image as a reformer who imposed the rule of law and rooted out post-Soviet corruption.
The controversy has helped Ivanishvili make the case that Saakashvili has become an undemocratic leader who tramples rights and freedoms, and could help win over the large group of Georgians who summertime polls showed were undecided.
The prison scandal led to street protests and heated rhetoric which included Saakashvili trading barbs with Georgia's powerful neighbour Russia, which during the 2008 war strengthened its control of the breakaway regions of South Ossetia and Abkhazia, which make up about one-fifth of the small country's territory.
Saakashvili's supporters say the election could determine whether Georgia moves closer to Russia or remains a staunch U.S. ally. They accuse Ivanishvili, who made much of his money in Russia, of being a Kremlin stooge, a charge he denies.
THE BALLOT BOX OR THE STREETS
Concerns about post-election have triggered calls for restraint from the West, which wants a stable Georgia because of its role as a conduit for Caspian Sea energy supplies to Europe and its location between Russia, Iran, Turkey and Central Asia.
"Political leaders should be chosen through the ballot box and not on the streets," parliamentary delegation heads from the Organization for Security and Cooperation in Europe, the Council of Europe, NATO and the European Parliament said on Saturday.
Ivanishvili told a rally on Saturday "this regime's hours are numbered", but has also said Georgian Dream would accept any outcome deemed legitimate by international observers.
A poll by the U.S. National Democratic Institute in August gave UNM 37 percent support against 12 percent for Georgian Dream but showed 43 percent of respondents could vote either way. There have been no major polls since the abuse scandal.
Elected in 2004 after the Rose Revolution protests toppled President Eduard Shevardnadze, a former Soviet foreign minister, Saakashvili cultivated close ties with Europe and the United States and sought to bring Georgia into NATO.
He also clamped down on police bribe-taking, made frequent power outages a thing of the past and presided over an economic resurgence before Georgia was hit by the global financial crisis and a 2008 war with Russia.
But opponents say he has curbed democracy, persecuting opponents, pressuring courts and controlling the media, and he faces criticism for leading Georgia into the 2008 war with Moscow in which Russian forces routed his army.
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