An Iranian warship moves into Azerbaijani waters to force an Azeri gunboat into retreat while Iranian warplanes fly overhead chasing away two British oil research ships.

Are Iran and Azerbaijan moving toward a military confrontation?

The question is no longer academic. The British Ambassador in Tehran Nick Browne quickly intervened to calm the situation by publicly announcing that London was withdrawing the British ships and would take no action that might be harmful to Iranian interests in the Caspian.

Tehran’s warning that it would use force to stop oil operations in Azeri waters in the Caspian was delivered in Baku last Saturday in the form of a brief letter from the Iranian “Supreme Guide” Ali Khamenei to Heydar Aliev, president of Azerbaijan. The letter was delivered by Hassan Rouhani, a mullah who acts as secretary-general of the Iranian High Council of National Defense. According to Iranian and Azeri sources, the Rouhani-Aliev meeting was a stormy one. At one point the two men almost came to blows before aides restrained them. Rouhani accused Aliev of turning Azerbaijan into “a base for Zionism and imperialism”. Aliev retorted by asking Rouhani to go and “tell the mullahs in Tehran that we shall never allow a theocratic state in Azerbaijan.”

Khamenei had asked Aliev to do three things: 1. Close the Israeli Embassy in Baku as a sign of solidarity with the Palestinian Intifada. 2. Order a moratorium on oil exploration activities in the disputed parts of the Caspian until the littoral states agree on a resource-sharing program. 3. Postpone a decision on the route of the Azeri oil pipeline to Europe until after a summit of the Caspian Sea leaders planned for next year.

Aliev, a former KGB general and Soviet deputy prime minister, rejected all three demands. Instead, he urged Iran to stop arming and supporting Armenia that occupies some 25 percent of Azerbaijan’s national territory since 1991. The Azeri media quoted Aliev as having told the Iranian envoy that Baku regarded its relations with the United States, Turkey and Israel as “strategic” and “ vital to Azerbaijan’s national interests”.

“Iran claims to be a defender of Islam but is arming Armenia, a Christian state, against the Muslim-Shiite people of Azerbaijan,” Azeri Foreign Minister Walayat Quliev said Tuesday. “We have no lesson to take from anyone on how to be Muslims.”

Theoretically, Iran and Azerbaijan should be the closest friends. What is now Azerbaijan was part of Iran until 1830 when Tehran ceded it to Moscow after two Russo-Iranian wars. More than 90 percent of Azerbaijan’s 7.5 million people are Shiites with a strong Iranian culture. Iran itself is home to almost 20 million ethnic Azeris.

And yet, relations between Tehran and Baku have gone from bad to worse ever since Azerbaijan became independent after the collapse of the Soviet empire in 1991. Successive governments in Baku have built alliances with the US, Turkey and Israel. Iran has reacted by forming an objective alliance with Russia in a joint bid to counter American influence in Transcaucasia. “Tehran has helped Armenia conquer Azeri territory and hang on to it for purely political reasons,” says Jawad Salehi, an Iranian specialist of the region. “The experience showed that when it comes to strategic interests, the Iranian leadership is prepared to disregard religious considerations.”

To make matters worse, Azerbaijan has opened its oilfields, believed to contain some $30 billion worth of reserves at present prices, to investors from the US, Europe and Turkey while specifically denying Iran a share. A compromise to let the National Iranian Oil Company (NIOC) have a five percent share in the Azeri East-Aras offshore field was cancelled in 1998 under pressure from Washington. Since then, the two neighbors have been at loggerheads about the status of the Caspian Sea. Iran argues that the Caspian, being a lake, should be regarded as a closed sea that belongs solely to the states that have costs around it. These states are Iran, Azerbaijan, Russia, Kazakhstan and Turkmenistan. Iran proposes that the five states divide the Caspian among themselves, each receiving 20 percent.

Azerbaijan, on the other hand, argues that the Caspian is big enough to be regarded as an international sea. Thus each littoral state should be allowed to have its own territorial waters in accordance with the existing Law of the Sea. The Azeri analysis, backed by the US and Turkey, would leave Iran with less than 11 percent of the Caspian waters while Kazakhstan and Azerbaijan will get almost 30 percent each.

In the debate over the status of the Caspian, Turkmenistan has verbally sided with Iran while Kazkhstan shares the Azeri view. Russia has played hot and cold. When it is given promises of a share in the sea’s oil plus new pipelines, Russia sides with Azerbaijan and, beyond it, the United States. When these promises appear shaky, Russia backs the Iranian position.

Baku has further angered Tehran by going ahead with the construction of a pipeline through Georgia and Turkey rather than Iran that offers the shortest and cheapest route to world oil markets.

Reports yesterday said Iran has recalled its ambassador to Baku for “urgent consultations” while moving reinforcements to its land border with Azerbaijan at Astara.

This week’s show of force in Caspian by Iran is interesting for another reason. Under a treaty signed with Russia in the 19th century and renewed in 1921 after the Bolsheviks won power in Moscow, Iran had agreed not to have a military navy in the Caspian. Now we know that Iran has effectively canceled that treaty and built up a naval presence in the landlocked sea.