NORTH POLE, ARCTICA- Desirous of possible underground oil and natural gas resources, the Russian Navy planted a flag in the Arctic Circle's frigid sea bed yesterday, officially claiming the land as part of Mother Russia. If geologists' calculations are correct, Russia now holds legal title on vast pockets of petroleum, an oily windfall that could transform the former communist state into the most powerful energy vendor in the world. Unfortunately, military planners had failed to anticipate one thing, an ugly revolt among the local inhabitants.

"That land is ours, we planted a flag and everything," recalled Captain Alexi Kokov. "After surfacing and exploring the tundra, we began to hear a faint sound, like a roar, from over an icy peak and it became steadily louder. Soon we found ourselves surrounded by what must have been ten thousand tiny men- angry, child-sized men in green velvet suits. Oh, it was horrible."

According to the few witnesses who survived the attack, the arctic insurgents descended on the unsuspecting Russians like a cloud of teeth and fists, clearing a path of pink snow behind them. As the crewmen sprinted back toward the safety of their submarine, the triumphant elves reportedly shouted curses and made obscene gestures.

"These elves, they bite," groaned one injured crew member as he was rolled into the sick bay. "The worst part is that they're just the proper height to do real damage if you know what I mean- and I think you know what I mean."

As tragic as it was embarrassing, the incident has raised more than a few eyebrows inside the Kremlin. More than anything, Putin and his deputies want to know why soldiers were not prepared for an ambush following the flag planting ceremony.

"They're elves, cute little elves," explained Kokov through the fragile satellite feed. "I never knew they were so bloodthirsty. Hell, I didn't even know they existed."

Fearing that their flag had been removed and their claim nullified, officials in Moscow ordered the men back onto the ice pack to settle the score once and for all. With shaking hands, the men grabbed their machine guns, grenades, and mortars headed for the site of the previous skirmish.

For a time the plan was working. Out-gunned and out maneuvered, the elves abandoned their positions and fell back to their base. The Russians cleverly tracked the tiny footprints back to the elven lair and found colorful warehouses full of small wooden objects. Though they appeared to resemble miniature trains and horses, it seemed clear to all that these were munitions of some sort. Arctic residents must be gearing up for some sort of large-scale attack on their Southern neighbors.

Suddenly the doors flung open and there appeared a giant bearded man bristling with weaponry and dressed all in red (presumably so that the blood stains would not show). He said nothing and simply laughed as he pumped round after round in the flank of hapless Russians.

"Yobany this!" grunted one soldier as he ran off into the limitless horizon of white. "This is not what I get paid four dollars per month to do."

As the terrified Russians limped away, the unidentified Arctic warlord made no attempt to pursue them.

"Run and hide, little boys!" he said, laughing. "In case you try this again, remember that I know where you live!"