15-10-02 President Mohammad Khatami told his Azeri counterpart there was an "urgent need" to break the deadlock over rival territorial claims in the oil-rich Caspian Sea.
Khatami said that establishing "a legal framework for the Caspian as soon as possible is an urgent need for regional stability and security".

Khatami and Azerbaijan's President Heidar Aliyev met on the sidelines of an economic summit of central Asian countries in the Turkish city of Istanbul. Russia, Kazakhstan and Azerbaijan have all signed bilateral deals to settle their borders in the Caspian -- thought to hold the world's third largest oil and gas reserves after the Gulf and Siberia.
But Iran and Azerbaijan, a former Soviet republic, have competing claims to potentially huge oil reserves in the south-eastern corner of the Caspian and show no signs of resolving their dispute any time soon. Iran and Turkmenistan are in a minority of the Caspian's littoral states in demanding an equal 20 % share of the sea with the rest, instead of proportionately to the length of their coastlines, which would give Iran 13 %.

The last time Khatami and Aliyev met, in Tehran in May, they said they had made progress towards teasing out a solution. Azerbaijan's President Heidar Aliyev and his counterpart Mohammad Khatami sign bilateral agreements in the fields of economy and culture in Tehran 20 May 2002.
Aliyev ended a three-day visit to Iran during which he pledged to boost his nation's ties with the Islamic republic. The visit aimed at ending a festering dispute over the neighbouring countries' rights to the oil wealth under the Caspian Sea.

But they revealed no concrete proposals and could not even agree on what to call the Caspian Sea. "I have seen no sign of the Iranians changing their position," said a western oil executive in Azerbaijan's capital, Baku, recently.
He added: "The only progress that is being made is between the three northern states (Russia, Kazakhstan and Azerbaijan). There is a two-track process going on and the southern states are in danger of being left behind. It is difficult to expect any fundamental resolution," said Tofiq Zufugar, a political analyst and former Azeri foreign minister.
"It has become an ideological issue... (The Caspian) is being used in the fight between the reformists and the conservatives in Iran so President Khatami's freedom of movement is restricted," he said.