Russian President Putin sees opening with Japan on island dispute

President Vladimir Putin talks to the pupils of Gymnasium No. 2 in Vladivostok, Russia on Sept 1. He struck a conciliatory tone before opening talks with Japan.
President Vladimir Putin talks to the pupils of Gymnasium No. 2 in Vladivostok, Russia on Sept 1. He struck a conciliatory tone before opening talks with Japan. PHOTO: EPA

MOSOW (Bloomberg) - Russian President Vladimir Putin struck a conciliatory tone before talks with Japanese Prime Minister Shinzo Abe on a territorial dispute that's prevented the two countries from signing a World War II peace treaty.

Resolving the conflict over four islands occupied by the Soviet Union in the final days of the war should be part of "setting the stage for the development of inter-governmental relations for the long term," Mr Putin said in an interview on Thursday (Sept 1) as he prepared to meet with Mr Abe at the Eastern Economic Forum in Russia's Pacific port city of Vladivostok on Friday.

"We're not talking about some exchange or some sale, we are talking about finding a solution where neither of the parties would feel defeated or a loser."

Russia is seeking warmer relations with Japan to woo investment as progress on deepening business ties with China has stalled. The two leaders are discussing the islands, called the Southern Kurils by Russia and the Northern Territories by Japan, for the second time this year after Mr Abe met Mr Putin in Sochi in May, snubbing an appeal by US President Barack Obama not to visit. Mr Putin plans to travelto Japan in December, the Kremlin said on Tuesday.

While "we don't trade in territories," Russia "would very much like to find a solution to this problem with our Japanese friends," Mr Putin said. If it "can reach a similarly high level of trust" with Japan as it now enjoys with China, "then we can find some sort of compromise," he said.

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A 1956 treaty signed by the Soviet Union and Japan almost resolved the islands dispute until "the Japanese side refused to adhere to it and then the Soviet Union basically nullified" the deal, Mr Putin said.

"I don't think it's closer than in 1956 but, in any case, we resumed a dialogue on this subject."

Mr Putin will follow the Abe meeting with a trip to the Group of 20 summit (G-20) in China. He'll be eager to show that Russia hasn't been left isolated by US and European Union sanctions over the crisis in Ukraine, which together with the collapse in oil prices tipped his country into its worst recession in two decades.

Trade with China, Russia's biggest single partner, contracted 28 per cent to US$63.6 billion (S$86.4 billion) last year, compared with the countries' joint target of US$100 billion.

Turnover with Japan, Russia's eighth-largest partner, declined by almost 31 per cent to US$21.3 billion and commodities accounted for more than three-quarters of Russian exports by value, according to the customs service in Moscow.