On the bumpy lane that passes for the main shopping street on the tiny island of Sark, the Barclay twins' man is pinning up an election poster.

It features a positive message about the economy, but Kevin Delaney is worried the poster will be torn down by political opponents as soon as night falls. Sir David and Sir Frederick Barclay, the multimillionaire owners of the Telegraph and the Ritz, are not everyone's favourite tycoons on this picturesque chunk of rock 80 miles off the British mainland.

For the last 450 years, Sark has been a feudal state, the last in the western world. But the law has changed, mainly at the prompting of the Barclay brothers, who live in a castle on an even smaller island called Brecqhou a few hundred metres off Sark. The reform means Sark's "seigneur", the feudal lord, is being stripped of many powers and rights and for the first time a largely elected parliament is being formed.

Nominations for "conseillers", the MPs, close this week and Sark's 473 electors go to the polls early next month.

But two bitterly opposed factions have emerged. Broadly, one supports the Barclay twins, DB and FB as their loyalists call them.

They are ploughing millions of pounds into the main island, refurbishing that bumpy main drag and buying up most of Sark's hotels. The twins argue that this investment is creating jobs and protecting Sark's future.

A second faction favours the seigneur, Michael Beaumont, and is worried that the Barclay twins are trying to seize control of the island and will change its character for ever. This split is causing terrible tension amongst Sark's 600 souls as election day nears. On street corners and in smoky backrooms - they still smoke in pubs here - plots are being hatched and alliances formed as the factions fight for control of "chief pleas," the island's parliament.

It is easy to poke fun at the traditions of Sark, where cars and lorries are banned and street lights non-existent. Such as the insistence of some landowners on keeping muskets to defend the place should it come under attack, as their ancestors were required to do. And the bargain fee the seigneur has always been required to hand over to the Queen for his fiefdom - "one 20th part of a knight's fee" - or £1.79 in modern money.

But for the Sarkees the move to democracy is absolutely serious, and proving more than a little painful. More than one had tears in their eyes as they told the Guardian how friends and neighbours had fallen out with each other. Candidate Sandra Williams, manager of the island hall and community centre and a critic of the Barclays, says she has been shunned by lifelong friends. "I've lived here since I was five," she said. "People I went to school with will walk on the other side to avoid having to speak to me."

The publicity-shy Barclays are not standing. Instead, their man on Sark, Kevin Delaney, has put his name forward and is campaigning on the boost to the economy from the Barclays' millions. That poster he was pinning up contrasted Sark's jobless figure - zero - with the rather less cheerful UK statistics.

Though the Barclays are not putting themselves forward, they did see fit this weekend to publish a glossy manifesto. It detailed their vision for the island, including controversial schemes such as the building of a helipad and a funicular railway. They also want further constitutional reform, believing the seigneur and the seneschal - the island's judge - will still have too much power even after democracy kicks in.

In their manifesto the Barclays say they have not invested to make money but because they love Brecqhou and Sark. They encourage Sarkees to stand - and align themselves with their manifesto. "We urge you not to vote for those who disagree fundamentally. They will ruin its economy, its independence, indeed the future of Sark," the twins write. The manifesto's tone is positively conciliatory compared with that of the Sark News, a bulletin published with the approval of the twins that is abrasively critical of their opponents.

In its November issue, for instance, it brands seigneur loyalist Edric Baker a "feudal talibanist". Baker, one of those who admits to still keeping a musket close at hand, is hurt but is putting himself forward for election.

"I'm not going to be put off by anyone," he said. The deep worry is that if the twins' supporters do not win power, the brothers may be tempted to stop investing. As they own so much, it could be disastrous if they pull out.

At the seigneur's beautiful 17th century home, complete with watch tower for signalling to Guernsey, Michael Beaumont, now 81, admits the last few years have "not been pleasant politically". He is upset that he will lose so much of his power in chief pleas but hopes that once the election has taken place, the fighting will die down.

So is democracy a good thing? He chuckles. "It's a very broad question," he

says, diplomatically.

"With reservations - yes."

The new order

In the 16th century Elizabeth I made Sark a fiefdom to be held in perpetuity by Helier De Carteret, the first seigneur. In return he had to maintain 40 households and "men with arms" to protect a strategically important outpost. The seigneur presided over the island's parliament, the chief pleas, and seats were allocated to the heads of the 40 households. Changes have been made over the years, with some "deputies" elected to chief pleas, but in recent times it became clear the parliament was not compliant with European human rights legislation. The law was reformed and the first elections will take place on December 10. Twenty-eight representatives - "conseillers" - will be elected in a secret ballot. They will run the island through committees. At midnight on January 8 the historic old chief pleas will die and at 9am next day the first democratically elected politicians will swear their oaths of allegiance.