GEORGIA, A SMALL Caucasian nation that has been a focus of U.S. foreign policy for a decade because of its push for integration with the West, has achieved a democratic breakthrough — at the price of losing the reformists who have led the country since the 2003 “Rose Revolution.” In parliamentary elections Monday, an opposition coalition led by a billionaire political novice defeated the ruling party and gained a majority in parliament, in what international observers called the most competitive and credible elections in the country’s history.

President Mikheil Saakashvili, a charismatic and controversial figure whom opponents frequently accused of abusing power, proved Tuesday that his commitment to liberal democracy was real. In a televised address delivered even before the official results had been announced, he recognized his party’s defeat and said he would allow the winning coalition to choose a new prime minister and cabinet — even though, under an ongoing constitutional reform, he will retain executive powers for another year.

Both Mr. Saakashvili’s government and the opposition Georgian Dream movement, led by Bidzina Ivanishvili, were guilty of abuses and extremist rhetoric during the campaign. There were fears that a loss by the opposition would lead to street demonstrations and violence. But the responsible behavior by both sides when the polls closed — Mr. Ivanishvili appealed to his supporters to remain peaceful and promised to work with the parliamentary opposition — gives reason for hope that Georgia could become the first country in the Caucasus, and the first former Soviet republic after the Baltic states, to consolidate a stable, working democracy.

Whether that occurs will depend heavily on Mr. Ivanishvili, who made his $6 billion fortune in Russia and entered Georgian politics only a year ago. Spending heavily in a country of fewer than 5 million people, he assembled a coalition that includes liberal, pro-Western reformers but also conservative nationalists who have played on resentment of the country’s ethnic minorities. Mr. Ivanishvili says he will continue Mr. Saakashvili’s policy of seeking membership in the European Union and NATO, but he has declined to criticize Russian President Vladimir Putin, who ordered an invasion of Georgia in 2008 and has made toppling Mr. Saakashvili a Kremlin priority.

Mr. Ivanishvili does not appear to be a Kremlin stooge. But neither does he seem to have internalized Western democratic values, such as tolerance of critical media and compromise with opponents. The danger is that Georgia will follow the route of Ukraine, where the leaders of the 2004 “Orange Revolution” gave way to their opposition after losing a 2010 free election, only to watch as the losing presidential candidate was imprisoned by the new regime, which is drifting toward the Russian-style autocracy that dominates ­post-Soviet Eurasia.

Mr. Saakashvili and his team have given Georgia an extraordinary boost toward joining the Western democracies — modernizing the economy, greatly reducing corruption and attracting billions in foreign investment. Now they have held a truly competitive election and agreed to peacefully hand over power to the winners. Mr. Ivanishvili was able to exploit popular frustration with government failings — including torture in the prison system and high unemployment. But Mr. Saakashvili has left a democratic legacy; the United States and European Union should insist that the new regime sustain and build on it.