For the first time since the collapse of the Soviet empire, Russian and allied forces have started a major series of military exercises in the Caspian Sea, highlighting the importance of the region’s coveted oil and natural gas reserves.

With Azerbaijan and Kazakhstan also taking part in the exercises, it is clear that a triple alliance is emerging to isolate Iran. The United States, for its part, gave its approval last week during a "friendly telephone conversation" between Defense Secretary Donald Rumsfeld and his Russian counterpart Igor Ivanov. Turkmenistan, which also has a coastline on the Caspian, turned down the invitation to take part for fear of antagonizing Iran with which it has a 1500-kilometre long frontier.

With some 10,000 troops, 60 warships, 30 attack aircraft and an unknown number of amphibious vessels, the exercises which will last for five years are the biggest the inland sea has ever seen.

With estimated oil reserves of 22 billion barrels (compared to the North Sea’s 16 billion barrels), the Caspian basin is the world’s largest oilfield after the Gulf. Anxious to reduce its dependence on OPEC oil, the Bush administration in Washington is increasingly interested in the Caspian. A recent "working paper" prepared for the administration, identified Russia as a "strategic partner" for the US in managing global energy supplies.

Russia, for its part, is keen to exploit the current difficulties in Washington’s relations with some of its moderate Arab allies as an opportunity to attract massive American investment to develop the Caspian’s energy resources.

The last time the Caspian witnessed a naval battle was in 1856 when the Russians sunk the Iranian Navy and established full military control for the czar. A treaty, which Russia imposed, on the Qajar Shah in Tehran, followed that. Under it, Iran agreed not to maintain a navy in the Caspian and to limit commercial navigation to its own coastal waters.

Some analysts see the exercises as a direct snub to Iran’s President Muhammad Khatami. Last April, he told a summit of the leaders of the Caspian littoral states in Ashkabad, capital of Turkmenistan, that the inland sea should be turned into "a zone of peace". He specifically appealed to Russia’s President Vladimir Putin to postpone the exercises until all the littoral states could take part.

The Russian analysis is that Khatami has already lost the struggle for power in Tehran and thus could no longer be regarded as a serious partner. "Iran is likely to be preoccupied by its own domestic problems for some time," says a source close to Ivanov. "We cannot wait until the factions (in Tehran) create a new equilibrium. The status of the Caspian must be decided now so that we can begin tapping its resources."

Since the fall of the Soviet empire, Iran has tried to secure agreement on a plan to declare the Caspian a closed sea jointly owned by its five littoral states. Under the Iranian plan, the Caspian will be jointly managed as far as such issues as protecting the environment, regulating commercial navigation, fixing quotas for fishing, and developing tourism are concerned.

When it comes to oil and gas resources, however, the Iranian plan would give each of the five littoral states 20 percent of the total.

Azerbaijan, backed by the United States, has opposed the Iranian plan right from the start. The Azerbaijanis insist that the Caspian should be divided among the littoral states in accordance with the size of their borders on the sea. That would give Iran just 11 percent of the total. Russia had initially supported Iran in a bid to prevent the US from gaining a dominant position in the Caspian through Azerbaijan and Kazakhstan. The Russian position changed after Putin and US President George W. Bush established "a strategic partnership" during a summit at Crawford, Texas, last year.

Turkmenistan, for its part, had tried to sit on the fence to please Russia and the US, which control the country’s energy resources, without antagonizing Iran that is home to some 3.5 million ethnic Turkmen who could be used against the authoritarian regime of Saparmurat Niyazov.

Having failed to sell its "shared sovereignty" plan to its neighbors, Iran has recently tried to revive a number of treaties it had signed with Russia in 1856,1921 and 1941. Under those treaties, the Caspian is regarded as a sea where only Russia and Iran have any rights. This is because Azerbaijan, Kazakhstan and Turkmenistan did not exist as independent states then.

The treaties that Khatami has been defending, however, have come under attack from many quarters, including some members of the Islamic Majlis in Tehran. This is because these treaties, imposed on Iran by the czarist empire and its successor, the Soviet empire, by force, include severe limitations of Iranian sovereignty. The 1921 treaty even allows Russia to send troops to Iran and occupy its Caspian provinces almost at will.

Russia’s saber rattling in the Caspian has caused much concern in Tehran where some pro-reform politicians see it as another instance of Iran suffering a big loss as a result of its anti-American stance. The Tehran newspaper Etemad, in a column last week, called on "decision-makers" to assess "the real cost of anti-Americanism." It wrote, "While we make our hearts glad with empty anti-US slogans, others are enlisting US support in order to exclude us from Afghanistan, the Caspian, the Caucasus and, very soon, Iraq and the Persian Gulf as well."