The electoral defeat of the ruling party of Georgian President Mikheil Saakashvili — which helped usher in Georgia’s Rose Revolution — is being greeted with mixed feelings from democracy promoters. On one hand, the free and fair election and Saakashvili’s concession were a remarkable success in a region that’s known for its rigged votes. On the other hand, the party that won the parliamentary elections, and gets to choose a new prime minister and cabinet, is run by billionaire Bidzina Ivanishvili, a man who supporters of Saakashvili and others worry is a cutout for Russia.

Whether or not that’s true remains to be seen. Ivanishvili made his billions in Russian state-owned industries, and was recently able to sell off these assets at a fair rate, something that just doesn’t happen without the green light from Russian President Vladimir Putin. As James Kirchick explains at the Wall Street Journal:

Announcing entry into Georgian politics last year, Mr. Ivanishvili promised to sell off his assets in Russia. He began selling to Russian state-owned concerns and other Kremlin-friendly businessmen, an option not afforded to oligarchs (such as Alexander Lebedev) who have run afoul of the Kremlin. One doesn’t become a billionaire in Russia in the 1990s, maintain that wealth and sell those assets at a fair price without the approval of President Vladimir Putin.

What’s clear is that Ivanishvili has pushed for much more favorable relations with Russian than Saakashvili, an arch adversary of Putin’s. And Russian Prime Minister Dmitry Medvedev’s enthusiastic response to Ivanishvili’s party’s victory certainly raises red flags:

Russian Prime Minister Dmitry Medvedev yesterday said the opposition’s victory showed a desire for change and offered a chance for dialog with Georgia.

“We can only welcome this as it likely means that there will be more constructive and responsible forces in parliament,” Medvedev told reporters in Makhachkala, the capital of Dagestan, the Russian region neighboring Georgia.

The Russian Foreign Ministry today said Saakashvili’s defeat may allow the Black Sea nation to bring about the “normalization” of ties with its neighbors and to establish “constructive and respectful relations.”

It’s reasonable to be concerned about Ivanishvili’s victory, but it’s also too early to say that Georgia’s democratic reforms will be rolled back or that it will devolve into a Russian satellite. While Ivanishvili’s Georgian Dream party will now choose a prime minister and cabinet, Saakashvili will still hold the presidency until the 2013 elections. It will be important to watch how the current transition takes place, who the Georgian Dream party elevates to key roles, what policies they pursue in office, and how the relationship with Russia changes. Saakashvili has set a critical example in the region for how a democratic leader acts, and Ivanishvili’s party should be expected to follow that lead.