NATO stages exercise as rearming Russia worries some allies

* Russia's more assertive military worries some in West

* Diplomats puzzled by big rise in Russia forces spending

* Moscow probes NATO airspace, holds "aggressive" manoeuvres

* Putin says world is far from being peaceful and safe

By Peter Apps

LONDON, Nov 1 (Reuters) - When NATO forces start a major exercise in Latvia and Poland this weekend, they will be rehearsing how to oust an anonymous invading enemy from a fictional region.

For some, however, exercise "Steadfast Jazz" will test how the Western alliance could deploy rapid reaction forces to its eastern flank - which borders Russia.

A militarily resurgent and swiftly rearming Russia is alarming NATO states that lie close to its territory, chiefly the Baltic States. Other alliance members are simply baffled, wondering why Moscow feels the need to spend vast sums on meeting a threat from the West they say will never materialise.

NATO stresses that the wargames are not aimed at Russia directly, although some officials say part of their point is to reassure eastern member states at a time when Russia is probing NATO airspace with bombers, building warships and conducting ever more sophisticated exercises.

From Nov. 2-7, "Steadfast Jazz" will involve about 7,000 troops and other personnel including special forces, as well as tanks, aircraft and ships. Officially the NATO Response Force is designed to operate anywhere in the world.

But in the Baltic States, which once lived under the Soviet Union, the wargames are also a rehearsal for an unlikely but plausible scenario closer to home.

"Russia as a country in the last five years has been increasing its assertiveness in the Baltic," Latvian defence minister Artis Pabriks told Reuters. "'Steadfast Jazz' is important to us as these are the first exercises where we really train to defend our territory."

NATO's Supreme Allied Commander General Philip Breedlove said the exercise would show the alliance's ability to fight sophisticated wars and defend its territory. Russian monitors would be invited.

"We have to be prepared for more high end military operations," he said in September, adding that NATO's counter- insurgency experience from Afghanistan was no longer enough.

By "high end" Breedlove meant combatting any possible threat from a well-armed state, rather than relatively crudely-armed guerrillas as in the alliance's most recent operations.

Russia's "high end" capability, experts say, is improving fast and NATO is responding. Apart from "Steadfast Jazz", NATO training near Russia recently included the "Brilliant Arrow" fast jet exercise in August in central Norway.