The November declaration of a state of emergency in Georgia called into question the political stability of a country that occupies a vital geostrategic position, as a transit route for central Asian oil and gas to Europe via Turkey and the Black Sea, and as a former Soviet republic that desperately wants to break away from Russian influence.

President Vladimir Putin and his advisers have shown increasing anger with Georgia's stubborn independence.

Moscow imposed a trade and transport embargo last year.

Mikheil Saakashvili, the 39-yearold president who came to power in a landslide election victory in 2004, has presided over a remarkable economic turnround in the past four years. Georgia has been the darling of international institutions and western governments as it transformed a collapsing post-Soviet system into a liberal market economy.

Yet in spite of a growth rate running at nearly 10 per cent a year, and foreign direct investment pouring into the country, the benefits of the Rose Revolution have failed to percolate beyond, at most, 20 per cent of the population.

A team of government ministers and advisers, almost all below the age of 40, launched a libertarian revolution, privatising swaths of the economy, scrapping thousands of Soviet-era regulations and simplifying the tax system - down from 22 taxes to only five by next year. The result is that Georgia has been classified one of the World Bank's top reformers and seen dramatic improvements in its rating for the ease of doing business. But thousands of civil servants and other public sector employees - including the entire police force - lost their jobs. Petty corruption decreased dramatically, but unemployment rose.

Mr Saakashvili's decision to call early presidential elections in January is a move to call the bluff of the opposition, which is disorganised and divided, and boasts no comparable figure to challenge him. But he has nonetheless seen his personal popularity slump from more than 90 per cent to below 40 per cent since the Rose Revolution.

On the one hand, he is accused by opposition leaders of autocratic behaviour and a failure to heed criticism.

On the other, he has ridden roughshod over the sensitivities of the older Soviet-educated generation, creating a generational gulf between his own team of young technocrats and those in their middle age.

The other cause of increasing restiveness in the population has been the failure of rapid economic growth to be translated into jobs and better wages for most people.

Moreover, those who survived for decades by cheating the Soviet system have seen their means of existence, in effect, wiped out.

An opinion poll conducted by Gallup in September on behalf of the International Republican Institute showed unemployment was by far the greatest concern (of 60 per cent of the population). Some 30 per cent named the economy in general, 10 per cent social problems, and 10 per cent inflation. Big improvements in electricity supplies and roads have not countered those worries.

The sectors that have seen the fastest growth - banking, communications, energy and construction - have not been those with the highest employment. Nearly half the population is still employed in agriculture, where the reforms have been slow to have any effect.

On top of the upheaval of deregulation and privatisation, the country has faced a potentially devastating trade and transport embargo by Russia, its largest trading partner, which has hit agricultural exports such as wine, grapes and citrus fruit.

Moscow's behaviour is the one factor that seems to unite the government and opposition, with 33 per cent of the population citing "territorial integrity" as a major concern, a reference to the Russian-backed secessionist movements in the territories of Abkhazia and South Ossetia.

Russia will certainly be happy to see Mr Saakashvili in political difficulties, but it is unlikely that any alternative leader would be more pro-Russian. On the other hand, Mr Saakashvili has yet to produce any evidence to justify his accusation that Russian agents were behind the street demonstrations that triggered the state of emergency.