World War II ended 71 years ago, but Japan and Russia still do not have a peace treaty.
What is stopping them is a spat over four islands just north of Hokkaido, known in Japan as the Northern Territories and in Russia as the Southern Kuril islands.
A treaty signed by both countries in 1855 entrusted Japan with ownership of the four islands, and Russia the other islands in the Kuril chain.
But Russia seized control in 1945 after Japan lost the war, and the 17,000 Japanese residents there were expelled to Hokkaido.
Some 30,000 Russians now live on the four islands.
Tokyo wants the four islands back and has called it the "remaining, biggest issue for Japan after World War II".
It insists the issue be resolved for a peace treaty to be concluded.
What's the downside? At worst (Prime Minister Shinzo Abe) will end up with improved relations with Russia which provides economic opportunities and an improved security situation.
DR JAMES BROWN, an expert in Japan-Russia relations, on Tokyo's focus on economic ties while negotiating the return of the islands.
Now, the leaders of the two countries are exploring a resolution to move their ties forward as they seek to balance China's influence in the North-east Asian region by forging closer bilateral ties.
For Russia, it is also a way of countering attempts to isolate it after it annexed the Crimea in 2014.
Japanese Prime Minister Shinzo Abe said earlier this month that the two sides should "together carve out a new era for Japan and Russia" by "putting an end to the unnatural state of affairs that has continued these 70 years".
Speaking at the Eastern Economic Forum in Russia's Far Eastern port city Vladivostok, he had called it an "unnatural state of affairs" that "the important neighbours of Russia and Japan have to this day not yet concluded a peace treaty".
But a breakthrough is not imminent, observers say, because of the complexity of the issue. Instead, they say, progress will be made in economic ties.
Russian President Vladimir Putin, on the sidelines of a Group of 20 (G-20) summit last Monday, reminded the Japanese of his country's offer to return two of the islands.
But Tokyo has refused the deal because the two islands on offer, Shikotan and the Habomai group, represent only 7 per cent of the overall land area in question.
But it is reportedly considering a "two-track idea" of seeking the initial return of the two islands, and persisting on talks on the fate of the other two, called Kunashir and Iturup, which are more resource-rich.
Dr James Brown, an expert in Japan-Russia relations at Temple University, called Tokyo's focus on economic ties while negotiating the return of the islands a "low-risk strategy" and "not a bad calculation".
"What's the downside? At worst (Mr Abe) will end up with improved relations with Russia which provides economic opportunities and an improved security situation," he told a news briefing.
"Russia is not going to embarrass him by making it absolutely clear he has no chance whatsoever of retaking the islands. They will continue to show that they are willing to talk about the peace treaty."
Mr Putin has stressed that Russia "does not trade in territories" but pledged to "seek a solution where neither party would be at a disadvantage, where neither party would perceive itself as conquered or defeated".
Russia has boosted the presence of soldiers on the four resource-rich islands.
Japan's attempt to reach a detente with Russia goes against the grain of its counterparts in the G-7 club of advanced economies, which as the G-8 had expelled Russia from its midst and slapped it with hefty economic sanctions after it annexed Crimea.
Mr Abe has made five trips to Russia without a reciprocal visit, and news that Mr Putin will finally be in Japan for bilateral talks this December was overshadowed by a slight fiasco - the Kremlin prematurely announced the visit, catching Tokyo by surprise.
Mr Abe will host Mr Putin in December at a ryokan in his hometown of Yamaguchi prefecture.
An online editorial in the Nikkei Asian Review noted that while Moscow wanted an official visit to Tokyo, Mr Abe chose the location "partly out of diplomatic consideration to the US, Japan's most important ally".
Still, the developments are seen as a breakthrough in Japan-Russia ties.
"There was a time when Japan approached Russia to promote economic cooperation and Russia tended to do the cherry-picking," said Mr Shinji Hyodo of Japan's National Institute for Defence Studies at a press briefing last Friday.
"This is why there has been no progress achieved on the islands issue. But Mr Putin considers the value of normalisation as important."
Dr Nobuo Shimotomai of Hosei University Graduate School of Politics also tells The Straits Times that the tactic of "economy first" to help Russia develop its energy- and resource-rich Far East region is in line with what Moscow wants.
"Mr Putin is putting in huge investments in infrastructure in the Far East, and there are a lot of opportunities there. The investment climate is lagging for the Japanese economy," he notes.
More than 100 Japanese business and municipal officials were at the Vladivostok meeting. Among the deals struck, Toshiba agreed to work with Russian Post on postal and logistics automation systems, while Mazda announced a plan to set up an engine factory.
But the objectives of both leaders go beyond economics.
Dr Artyom Lukin, associate professor at the School of Regional and International Studies at the Far Eastern Federal University, notes in a commentary in the East Asia Forum website that both Mr Putin and Mr Abe are conservative leaders in domestic politics who have "aspiring visions of their countries as influential on the world stage".
On this, Dr Shimotomai observes that Mr Putin is leveraging on the island talks to "prove to the international community that he is committed to solving complicated issues".