Georgia has approved a new electoral law ahead of a parliamentary election this October, but opposition politicians say it ignores key recommendations from the international community that were vital to ensuring a fairer democracy.

The Council of Europe, the European Union, the US and NATO had all encouraged electoral reforms to level the political playing field in Georgia, and NATO Secretary General Anders Fogh Rasmussen told students in November that elections in 2012-13 would be a “key benchmark” of their country’s democratic development.

Critics, however, claim that some of the new reforms only pay lip service to opposition and Western demands, while others seem principally designed to neutralise the ambitions of billionaire Bidzina Ivanishvili, who hopes to run against the government. See Georgian Authorities Try to Clip Businessman's Wings for more.)

After 46 amendments, parliament passed the law in its third and final reading on December 27, with 111 of 113 MPs in favour.

“The code is adopted. There now remains only one small detail: we must hold elections,” parliamentary speaker David Bakradze said following the vote.

President Mikheil Saakashvili, who signed off on the law on January 5, said the law would further legitimise the electoral process. “Elections must be clean,” he added.

Opposition officials, however, had hoped the law would convert a significant number of constituencies from the first-past-the-post system to proportional representation. They believe the former system favours Saakashvili’s ruling United National Movement, UNM, and that changing it would let opposition parties achieve a position consistent with the real level of their public support.

Before the vote, 75 seats in parliament were elected by proportional representation and the rest by the first-past-the-post system. The new law changes the ratio to 77:73, and critics say the change is too small to make any difference.

Nor does the law address the enormous difference in the population sizes of constituencies used for first-past-the-post elections. A single constituency can number from as few as 6,000 voters to more than 140,000.

The Council of Europe’s Venice Commission, which looks at constitutional law issues, had called for change in December, saying the failure to create “constituencies of an approximately equal size” had made it impossible “to guarantee the equality of the vote”.

The law does incorporate some of the Venice Commission’s recommendations. Georgians jailed for periods shorter than five years can now vote, and people with authorisation to be in polling stations will be allowed to film, although not in voting booths. State officials are barred from campaigning as part of their work, although the law ignores the commission’s suggestion that governors and other top officials be banned from campaigning altogether.

Transparency International Georgia said some aspects of the law were retroactive in effect and therefore unconstitutional, and the United States embassy also voiced unease.

“We regret that there was no agreement on elements of the new code that would have addressed lingering perceptions of inequality within the electoral system,” the embassy said in a statement. “We are concerned that retroactive application of certain campaign finance provisions would reinforce existing imbalances in political competitiveness.”

The legislation contains a new rule restricting the extent to which businesses can fund political parties, a provision that some believe is specifically intended to prevent the oligarch Ivanishvili from gaining ground.

The authorities stripped Ivanishvili of Georgian citizenship after he announced in October that he intended to form a political party.

In late 2011, Ivanishvili donated about 2.6 million US dollars to four opposition parties. Previously, large private donations tended to go to President Saakashvili’s UNM. In local elections in 2010, the UNM spent 14 million laris – about 8.3 million dollars at current rates – on campaigning, while four opposition parties spent about two million laris between them.

Under the new rules, individuals are barred from making annual political donations of more than about 3,600 dollars, and membership fees are capped at around 600 dollars. If a party polls more than five per cent of the vote, it will be eligible for nearly 600,000 dollars in state funding.

While this might sound substantial, it is still far less what a party might be able to raise privately, according to Vakhtang Khmaladze, a member of the opposition Republican Party.

A separate law tightens up on bribery “with a political aim”, an offence that now carries heavy fines or three years in jail. Companies found to have breached the rules could face liquidation.

Khmaladze believes that limiting private funding will undermine democracy.

“If you restrict donations, then the opportunities for a party to conduct a decent electoral campaign will also be restricted,” Khmaladze said. “These amendments worsen the electoral environment rather than improving it.”

Sophia Bukia is an IWPR-trained reporter in Tbilisi, and Maia Tsiklauri works for the Liberali magazine.