Speaking Friday to reporters at the Centre d’Accueil de la Presse Étragère (CAPE, or the Foreign Press Club) in the French capital, Mrs. Hoseinova, described Tehran-Baku relations as "friendly" and enjoying "good neighbourly co-operation", but stressed that the military, economic and diplomatic backing Iran brings to Armenia are "a source of disappointment and frustration" for the Azeri people.

The Armenian "military aggression" against Azerbaijan and the "occupation" of the enclave, that forms 20 per cent of the Azerbaijan’s territory, resulted in the "forced expulsion" of more than 200.000 Azeri who lives as refugees in the mainland and more than 30.000 killed, wounded and disabled, the Ambassador said.

She said though all negotiations held between Baku and Yerevan over the past ten years under various auspices and mediations, including the United Nations, the European Union, Iran, Russia and Turkey for a peaceful settlement of the conflict have remained fruitless, yet Azerbaijan, "despite a much better and superior economic outlook", does not intend to use force against the landlocked Armenia.

She welcomed present Russian stand in the Azerbaijan-Armenia crisis, observing however that at the start of the conflict, Moscow was openly backing Armenia with large amount of weapons while Azerbaijan lacked even a national army.

"But over the years, Moscow took a more "balanced" attitude, particularly after the coming to power of President Vladimir Putin", she observed.

However, she noted, Russia has specific agreements with Armenia, which also enjoys substantial help from the Islamic Republic of Iran.

Mrs. Hoseinova described as a "principled" the position" of Turkey, Azerbaijan’s main military, economic and diplomatic" backer as well as its mentor and model, saying Ankara stood for a "peaceful solution" of the Nagorni-Karabakh conflict based on the withdrawal of Armenian "occupation" forces from the region and a negotiated peace between the two sides.

Chief among the "disputes and controversies" is the demarcation of the energy rich Caspian Sea waters.

While an isolated Iran insist on the equal sharing of the Sea among all five littoral States, based on old agreements signed between the defunct Soviet Union and Iran, thus giving Tehran 20 per cent of the Sea’s waters, Azerbaijan, Russia and Kazakhstan have already defined their respective territorial waters, living Iran with 13 per cent only, with the maverick Turkmenistan also engaged in dispute with Azerbaijan over the Sea’s bed resources.

Mrs. Hoseinova minimised as a "minor diplomatic incident" the Iranian action, but hoped that Iran would ultimately join other nations bordering the Caspian Sea, thus confirming.

A former high-ranking officer with the KGB, President Alyev visited Moscow on the invitation of his Russian counterpart Vladimir Putin at the end of January, during which the two sides agreed on the definition of their borders in the Caspian along the same principles used earlier between Russia and Kazakhstan.

But announcements by Iran of plans to carry out geological exploration work in the disputed sector of the Caspian Sea obviously angered Russia.

Observers said Iran’s move might be the result of the latest row between Tehran and Moscow following the sudden cancellation of the planned visit to Russia by the Iranian Foreign Minister.

Mr. Kamal Kharazi was due in Moscow on Monday, but the visit was cancelled sine die by Tehran on what the Russia side described as "technical reasons".

But informed sources told IPS that the Iranians cancelled it after realizing that no meeting with the Russian President was slotted for Mr. Kharrazi.

Iranian Oil Minister Bizhan Namdar-Zanganeh announced that his country will not wait for a final agreement on the demarcation of the Caspian Sea into national sectors and is already starting to implement oil and gas projects in the territory it considers to be its own, adding that Iran would hinder operations by other countries in "its" sector of the Caspian.

Tehran also accuses Baku of having close economic, military and intelligence ties with Israel, a regime that Iran does not recognize, in the one hand and providing military bases to the US-led North Atlantic Treaty Organisation.

To confront the Baku-Ankara-Tel Aviv axis, Islamic Iran has formed an odd alliance with Orthodox Catholic Armenia and Greece, respectively Azerbaijan and Turkey’s archenemies

Mrs. Hoseinova described as "natural" Baku-Washington ties, particularly since American oil firms have the "lion’s share" in investing in Azerbaijan’s oil and gas sectors as well as in other economic fields and added that as a "democratic and secular" nation where all faiths were free (contrary to Iran where religious minorities are discriminated, including Sunni Muslims), Azerbaijan enjoyed "good relations" with Tel-Aviv.

Elsewhere, the Azeri diplomat who was speaking in fluent French categorically rejected as "baseless" press reports that Osama Ben Laden’s Al-Qa’eda terror network had ties with fundamentalist Muslims in his country, observing that Baku had joined the US-led war on international terrorism by offering bases and facilities to American forces.

She candidly acknowledged that "like other former Soviet Union republics" Azerbaijan was also plagued by wide-range corruption and blamed the "occupation" of Nagorni-Karabakh and the burden of one million refugees as "some reasons" for the country’s poverty, despite huge wealth generating by two "black gold" of oil and caviar, but said that the situation improves "steadily" both economically and politically. ENDS AZARBAIJAN SITUATION 23202