WASHINGTON, June 6 (UPI) -- The peaceful implosion of the Soviet Union in December 1991 completely changed the geography of the Caspian Sea region: Where Iran had previously shared the Caspian with the Soviet Union, in its place arose four new states -- the Russian Federation, Azerbaijan, Kazakhstan and Turkmenistan.

Ever since then, the world's largest inland sea has been subjected to a relentless covert conflict between the Kremlin and the West to exploit the water's riches, as the oil in the Caspian basin is by some estimates worth more than a staggering $12 trillion. Needless to say, such riches have focused the attention of the Bush administration, the most hydrocarbon-friendly government in U.S. history. In 1998 Vice President Dick Cheney, former Halliburton CEO, said, "I can't think of a time when we've had a region emerge as suddenly to become as strategically significant as the Caspian."

The entry of Western companies to the region is strongly opposed by Russia, which continues to view the region as the "near abroad." To the south, Iran, OPEC's second-largest producer, is hardly disposed to see an increased U.S. presence in the Caspian basin, as Tehran is still simmering over the 1996 Iran-Libya Sanctions Act and Washington's pressures about its nuclear activities. Brandishing a large cudgel, ILSA threatened not only U.S. but foreign countries and energy companies with possible sanctions if they invested more than $20 million in developing Iran's energy resources. As the United States is the world's largest oil importer, it was a potent threat, but the policy alienated many allies, particularly those in the European Union.

Unlike Kazakhstan and Turkmenistan, which for the moment are still largely dependent on Russia's Transneft government monopoly Soviet-era pipelines for exports and thus still under the Kremlin's thrall, Azerbaijan has been able to cast off completely its dependency on export routes under Moscow's control, with the result that Baku has one of the world's fastest-growing economies. Because of its oil revenues, last year the International Monetary Fund predicted Azerbaijan's growth would be 29 percent, down from 31 percent in 2006.

Azerbaijan's drive for energy independence began immediately after the dissolution of the Soviet Union. For initial oil exports, Azerbaijan was forced to use Transneft's Baku-Novorossiisk pipeline, a privilege for which Russia charged extortionate transit fees. Azerbaijan's Heydar Aliyev, the former KGB boss who became president in June 1993, was determined to break Moscow's monopoly, and the following year signed the $13 billion "Contract of the Century," whose International Contract No. 1 for the development of the Azeri, Chirag and offshore Gunashli fields with international companies gave them access to potential oil reserves estimated at 6 billion barrels, signaling the start of massive development of Azerbaijan's oil assets.