Japan PM sees progress on islands after Medvedev talks

Russia's President Vladimir Putin (R) and Japanese Prime Minister Yasuo Fukuda meet for talks in the presidential residence Novo-Ogaryovo outside Moscow April 26, 2008. (REUTERS/Ria Novosti/Kremlin/Pool)

MEIENDORF CASTLE, Russia (Reuters) - Japanese Prime Minister Yasuo Fukuda said on Saturday he believed progress towards resolving a decades-old dispute over a group of Pacific islands was possible.

"With respect to the territorial issue, I believe we will be able to secure a positive direction," Fukuda said after talks with Russia's President-elect Dmitry Medvedev.

But Russian officials said the issue had not been discussed in depth and analysts were skeptical of any sort of breakthrough under President Vladimir Putin or Medvedev.

The row over the sparsely populated islands, known as the Northern Territories in Japan and Southern Kuriles in Russia, has prevented Moscow and Tokyo from signing a peace treaty more than 60 years after the end of World War Two.

"We are continuing dialogue on the peace treaty and will create the necessary conditions for advancement along this path," Putin said before the talks. "There still exist many unresolved problems" in relations, he said, without elaborating.

Fukuda's talks with Medvedev at the Meiendorf Castle outside Moscow also focused on the agenda for the Group of Eight summit which Japan hosts this year.

Medvedev, who will be sworn in as president on May 7, said he wanted to discuss "above all the G8 summit" on Japan's northern island of Hokkaido.

Tokyo hopes the G8 summit will help draft a climate change agreement that would embrace the biggest polluters such as the United States, China and India. None of these has signed up to the existing Kyoto Protocol, which expires in 2012.

A Japanese Foreign Ministry official said Putin promised to cooperate "positively" on work for a post-Kyoto framework.

DISPUTED ISLANDS

Russia has said it is ready to talk about the disputed islands, but Moscow is not prepared to give them up.

Putin spokesman Alexei Gromov was quoted by Russian news agencies as saying that the territorial question was not discussed in detail.

Analysts said that with Fukuda's domestic clout waning in the face of a divided parliament, Russia was unwilling to negotiate with him.

"The territorial issue can never be resolved because broad-based nationalism is surging in Russia," said Shigeki Hakamada, an expert on Russo-Japanese affairs at Tokyo's Aoyama Gakuin University.

"Russia knows well that Fukuda's political base is very fragile and therefore Russia is not willing to negotiate with him," he said. "Because public support for Fukuda is declining at home, he wants do something to score diplomatic points."

Fukuda and Putin also agreed to cooperate to ensure North Korea fully declared its nuclear activities, the Japanese Foreign Ministry official said.

Trade between Russia and Japan was worth $20 billion in 2007, fuelled by automakers such as Toyota Motor Corp which has set up a factory to tap into the booming Russian market.

But bilateral trade with Japan is less than half Russia's trade with China.

Japanese companies want to invest more in energy projects in Russia, the world's second biggest oil exporter, to reduce dependence on oil from the Middle East. But Russian officials said there were no major deals planned.

- For a factbox on Japanese-Russian relations, click on

(Additional reporting by Oleg Shchedrov; writing by Guy Faulconbridge; editing by Philippa Fletcher)

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