DAHLAK KEBIR, Eritrea (Reuters) -- Shoals of jackfish and snapper emerge from the gloom of the scuttled, rusting warship as visitors snorkel past.
A short distance away, angelfish and sweetlips glide above the coral, a turtle slips beneath the surface, and dolphins chase a small boat carrying captivated tourists.
"Unbelievable, spectacular," said Alessandro Palmero, a diplomat with the European Commission and regular visitor to the Dahlak Islands off Eritrea, after a dive.
"First, two rays, then a shark, then thousands of snapper, thousands of jackfish, and five giant groupers dancing around us."
Despite the mesmerizing sea life, research and development of Eritrea's coast and waters has been inhibited by decades of conflict.
Eritrea fought a long and bloody war for independence from Ethiopia between 1961 and 1991, and another war between the two countries from 1998 to 2000 killed 70,000 people.
Border tensions remain high.
At the entrance to the inland sea of Dahlak Kebir, old rocket launchers litter the sharp, volcanic rock and Soviet-made tanks are rumored to lie on the seabed.
The blisteringly hot sand and jagged rock of the arid Dahlak archipelago are a striking contrast to the myriad sealife.
Divers sing the praises of the waters around the 350 or so islands and rock outcrops scattered from 20 km to 160 km (12 miles to 100 miles) from Eritrea's main port of Massawa.
Five of the world's seven species of sea turtles, dolphins, dugongs and occasionally whales are found in Eritrean waters, a United Nations-supported survey found last year.
The survey was the first in the Red Sea state's waters and brought exciting discoveries.
In May 2005, scientists found an Olive Ridley turtle -- an endangered species -- the first recorded in the Red Sea.
"We discovered it because we started investigating," Kaleab Negussie, the national project manager for Eritrea's Coastal Marine and Island Biodiversity Project, told Reuters.
"This is the beginning."
Peace has brought an increase in activity in Eritrea's coastal waters. Fishermen from Eritrea, Yemen and Egypt base themselves on the islands for months at a time.
The government made a deal with an Egyptian businessman last year to allow 40 Egyptian ships to catch 140,000 tonnes of fish annually in Eritrea's waters, an Egyptian source said.
The information could not be confirmed, but would be a large increase from the 6,500 to 13,000 tonnes which, according to International Monetary Fund data, were caught and sold annually from 2000 to 2005.
While income from fishing could increase, money from tourism remains limited despite the government's best intentions.
Some travel agents say continued border tensions discourage travel to Eritrea, and government controls also inhibit development of an efficient private sector.
One travel company, Eritrea Divers, has been forced to close. "We have to apologize that the situation in the country gives us no other choice for now," its Web site explains.
Most visitors prefer to camp on the 21 islands open to tourists, sleeping under starry skies.
Away from the tourists and fishermen, the 1,500 Afar and Tigray people who live on the islands -- mostly on Dahlak Kebir -- are deeply respectful of the wildlife.
Killing animals will lead to drought, they say.
"(They believe that) it is for the sake of wildlife, that God gives them rain," said Hagos Yohannes, a wildlife conservation adviser at the Ministry of Agriculture.
Ethiopian and Soviet soldiers, based on the island in the 1980s during Eritrea's war for independence, used to kill the animals, he said.
"The community was so distressed that they offered their own goats and sheep instead of gazelles," he said.
"If we work hard and give equal priority to conservation and development in general, I am sure we will succeed," he added.