Some 2,500 Turkmen soldiers and the countrys air force simulated fighting off a group of terrorists trying to cross the territory of Turkmenistan during the one-day exercises, held near the western city of Turkmenbashi.

The manoeuvres, which were observed by Turkmen President Saparmurat Niyazov, members of the country's government, NATO officials and a large group of media, also included a simulated killing of hostage-takers while freeing the hostages themselves.

Turkmenistan refused to take part in large-scale naval exercises held last August that included three other Caspian states -- Russia, Kazakhstan and Azerbaijan -- citing its neutral status.

The Turkmen foreign ministry issued a statement at the time saying, "Turkmenistan, as a neutral state, is not taking part and does not intend to take part in future in any military exercises on the Caspian, either as a participant or as an observer."

Last year's exercises, which involved more than 60 warships and 10,000 men, were seen as an attempt by Russia to show its military strength and ability to protect its interests on the Caspian.

The Caspian Sea is thought to hold the world's third-biggest oil and gas reserves, but the five states on its shores -- Russia, Iran, Azerbaijan, Kazakhstan and Turkmenistan -- are at loggerheads on how to divide it.

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