By Margarita Antidze

TBILISI (Reuters) - Georgian President Mikheil Saakashvili on Sunday faces his first electoral test since a disastrous war with neighboring Russia in 2008 in nationwide local polls and a vote for the capital's mayor.

Opposition leaders, some of whom have called for closer cooperation with arch foe Russia, want to use the polls to position themselves for presidential runs in 2013 when Saakashvili is due to step down after a decade in power.

"This is the first chance we've had to gauge the level of support that the government has after the 2008 war," said Lawrence Sheets of the International Crisis Group think-tank.

"So the opposition, or the various elements of the opposition, which are myriad, have tried to portray this as a referendum on the present government and its policies."

The opposition hopes the municipal polls will dent the support still enjoyed by Saakashvili's United National Movement despite the five-day war and a 3.9 percent contraction of the Georgian economy last year.

But dogged by differences and without a coherent platform, the opposition appears to be making little headway in offering a coherent alternative to Saakashvili's rule.

The capital Tbilisi, home to more than a quarter of Georgia's 4.5 million people, on Sunday will for the first time directly elect a mayor, widely seen as a potential springboard to the presidency.

Incumbent Gigi Ugulava, a member of the ruling party, is favorite for mayor, aided by frantic council repair work on streets and homes in Tbilisi in the run-up to the election that the opposition says stinks of foul play.

"I don't believe he really cares about ordinary people, but at the same time I don't believe that others will be better," said Lia Gunia, a 44-year-old shop assistant.

Political insiders agree Ugulava has presidential ambitions.

Of the eight other candidates, Ugulava's closest challenger appears to be Irakly Alasania, a mild-mannered former U.N. envoy who was feted as a potential challenger to Saakashvili when he quit after the war and joined other defectors in opposition.

WESTERN SUPPORT

Georgia's investment-driven economy, which enjoyed strong growth on the back of liberal reforms before the global financial crisis, can ill-afford more instability after Saakashvili faced down months of street protests last year.

Some in the opposition are again threatening to take to the streets if they deem the vote unfair.
"I think there will be some fuss after election, with people in the streets, but it won't result in any radical changes," said Georgian analyst Archil Gegeshidze.

Western support for the 42-year-old has waned over his record on democracy and the war with Russia, when an assault by Georgia's U.S.-trained military on the rebel region of South Ossetia triggered a crushing Russian counterstrike.

Saakashvili says he has created a model democracy -- a rarity in a region dominated by rigged polls and long-serving authoritarian leaders. Critics accuse him of monopolizing power, marginalizing the opposition and manipulating the media.

Opinion polls by the respected U.S. National Democratic Institute and other Western organizations suggest the ruling party will win most of Sunday's polls comfortably.

The West is keen to stabilize the volatile South Caucasus, a transit route for oil and gas to Europe. The Organization for Security and Cooperation in Europe is sending 350 observers.

Jobs and poverty top the list of voter concerns, according to an opinion poll last month. But relations with former Soviet master Russia are never far from the political agenda.

Some in the opposition say ties should be restored, in the hope of renewing direct flights and lifting a Russian embargo on Georgia's main exports -- wine and mineral water.

(Writing by Margarita Antidze; Editing by Maria Golovnina)

© Thomson Reuters 2010. All rights reserved.