A complex game of geopolitical strategy is being played out in Eurasia reminiscent of what historians call the Great Game between Britain and Russia in the 19th century. Of course, the more recent Cold-War period also provided opportunity for strategic jockeying. But neither of them compares with the scale and complexity of what is currently occurring.

The game is not just fascinating to watch but has important consequences for the global balance of economic and political power. It involves a substantial commitment of resources by the major players, some of whom may not have sufficient fortitude as the stakes are raised.

During the Reagan presidency, a deliberate policy of heating up the arms race forced the Kremlin into errors that eventually led to the demise of Soviet power and a realignment of the global system, both politically and economically.

Many countries, great and small, as well as political blocs and alliances are involved in the present struggle. Also, there is a good deal of interrelationship among issues and disputes that, at first glance, appear to be isolated. And the game is constantly evolving, so that an astute analyst must continually monitor events and their repercussions.

Let us start with an examination of the thrust of US policies in Eurasia. The notion that the Obama administration was going to be softer and more isolationist than the previous one reflects the naiveté of those who believed it, rather than what normally happens in the real world. As with any country, there is substantial continuity in policies, even if a new administration declares a desire for change.

The Obama team's objectives are centred, not around reversing Bush's policies but in trying to undo the errors and conduct a more effective campaign to ensure American predominance in Eurasia. This contention is indeed supported by their pronouncements, as well as US actions on the ground.

The relationship with Russia is an important one, and there were expectations of a more lenient approach in accommodating Russian interests in Europe and Asia. Certainly, the rulers in Moscow were ready to cut a deal. But they have been quite disappointed, as the US has adopted a tough stance, refusing to recognise a Russian sphere of influence.

A resurgent Russia - since the start of the Putin era - is concerned about losing ground in Eastern Europe, the Caucasus, Central Asia and even the Middle East. With Nato expanding ever eastward, one can understand their anxieties. They feel surrounded.

Moscow has continued to rebuild its military strength, which had declined dramatically during the Yeltsin years. But it is not only Russia that is boosting defence spending. So are China and India. And the smaller powers in Asia are also following suite.

However, the nature of the struggle among the various powers is not a directly confrontational one. There are subtleties involved. Russia and China do not want the United States to be out of the game entirely. They are keen to have the Americans lead the fight against Islamic extremism. But they certainly don't want the US to be too successful and become entrenched in the region.

The irony is that during the communist era, the US supported many of these Islamic groups as a means of weakening Soviet power in Central Asia and countering the perceived communist threat. Unfortunately, the extremists grew into hydra-headed monsters that are now active across the world and endanger civilised order.

President Obama's policy in Iraq is unlikely to be one of total withdrawal. The US has spent too much in terms of blood and treasure, and Iraq is too unstable to be let loose. In reality, the Americans are adopting a low profile in their military activities. Perhaps this is part of what Hillary Clinton calls 'smart power'.

What is garnering more attention from everybody is the situation in Afghanistan. It is a failed state and a fractured society with a corrupt and incompetent government propped up by foreigners and facing a major Islamist insurgency in the form of the Taliban. But the option of simply walking away from this mess is unacceptable because of the repercussions of a Taliban success for Pakistan, India and Central Asia.

With many European members of the coalition in Afghanistan dragging their heels, the Americans have taken the Taliban head on in their main stronghold of Helmand province. The choice of venue is not accidental. It is close to the Iranian border and Pakistani Baluchistan. This is a poor and discontented province that is, nevertheless, rich in resources and possesses the important Chinese-built port of Gwadar. Once the region is pacified, it could act as part of an economic corridor to Central Asia and on to China.

The US has been pressuring Pakistan to drop its two-faced and undeclared agenda of supporting Islamic extremists. The Pakistanis have used it in the past as a means of exercising influence in Afghanistan and confronting India's power. But India also bears responsibility because of its uncompromising attitude in the stalemate over Kashmir, which has become a hotbed of Jihadism.

In her recent trip to India, Hillary Clinton tried to draw the two major protagonists into closer cooperation in resolving the security issues. More generally, the Americans are keen to distance India from China and bring it into their own sphere of influence.

Given the limitations of writing space, the above is only an outline of some of the main trends underway. In part two we will examine the pipeline wars, Europe's role, China's ascendancy and the situation in Iran.

Iraj Pouyandeh is a strategist and senior portfolio manager at LOM Asset Management. He manages the LOM Global Equity Fund. For more information on LOM Asset Management please visit www.lomam.com