With more high-level talks with Moscow in the offing, Japan is hoping to seize the opportunity to crack the long-standing territorial dispute over the Russian-held islands off Hokkaido.

Japan knows it will be no easy feat, but officials are keen to make inroads while the momentum — buoyed by stronger economic ties and expectations of movement before President Vladimir Putin’s term in office ends in 2008 — is there.

Foreign Minister Taro Aso, at the outset of his meeting with his Russian counterpart, Sergei Lavrov, during his visit to Russia on May 3, said he believes the “dynamics of the Japan-Russia relationship are heading in the right direction,” citing frequent visits to Japan recently by Russian political and business leaders.

“We need each other from the viewpoint of a strategic relationship,” said Aso, the first Cabinet minister under the administration of Prime Minister Shinzo Abe to visit Russia.

Russia, too, says it understands the growing importance of cooperation with Japan to sustain its economy.

“I am certain that a partnership on a broad range, such as the economy, science, culture and security, will play a major role in creating the foundation to pave the way for resolving the issue,” Mikhail Bely, Russia’s new ambassador to Japan, said in a recent public address.

Bely was referring to the dispute over the islands of Kunashiri, Etorofu, Shikotan and the Habomai islets.

Japan claims the islands are an integral part of its sovereign territory that Russia illegally occupied shortly after the end of World War II. The disagreement has prevented the two countries from concluding a formal peace treaty ending the war.

Tokyo demands the return of all four islands and has called for concluding a peace treaty at an early date by resolving the ownership dispute in line with the 1993 Tokyo Declaration.

Russia, citing the 1956 Japan-Soviet Joint Declaration, has sought to resolve the issue by handing over two of the four islands after the conclusion of a peace treaty.

Japanese government sources said that sticking to those positions will get them nowhere, underscoring the need to rethink strategy on the issue.

In recent months, Japanese and Russian leaders have said they want to seek a resolution “mutually acceptable” to both sides — a phrase that suggests a softening of Russia’s posture.

The aim is to build on good bilateral cooperation in various fields, especially on the economic front, one of the sources said.

Doing so will intertwine the two nations’ economies and create an environment in which both nations will not want to let the isles remain a sticking point for long, the source said on condition of anonymity.

To lay the groundwork for such an environment, officials and prominent figures from Japan and Russia have been traveling between the two nations.

In January, Vice Foreign Minister Shotaro Yachi, the ministry’s top diplomat and known to be close to Abe, visited Moscow for the first Japan-Russia strategic dialogue. Prime Minister Mikhail Fradkov, together with about 200 Russian political and business leaders, visited Japan in February.

Following Aso’s Russia trip, a vice-ministerial meeting in Moscow and a second strategic dialogue in Tokyo will be held in May.

Increased bilateral exchanges aim to reflect the importance the Abe administration places on Russia.

Abe, who took office last September, has vowed to pick up the torch from his late father, Shintaro, a former foreign minister who was active on building ties with Russia.

“The guiding principle (with which both governments set off this series of dialogues) is that the history of Russia and Japan can be much brighter in this century, the 21st century, than it was for a long time in the last century,” said Tomohiko Taniguchi, a Foreign Ministry spokesman.

The exchanges also come amid optimism there will be some progress while Putin is in office as officials believe the issue ultimately will be resolved by a “political decision” at the top level.

Aso in December expressed hope for negotiating a resolution during Putin’s term, saying it is “realistic to have a solution” to the isles dispute while he is still in office, given his keenness to settle the issue and his strong leadership and stable political foundation.

But Shigeki Hakamada, an expert on Russian affairs, dismisses such views as “overly optimistic.”

“Realistically speaking, it is impossible because the situation in Russia will not tolerate (the return of the islands),” said the Aoyama Gakuin University professor.

According to Hakamada, Russia’s position on the islands has hardened as it has gained confidence due to its economic expansion based on higher crude oil prices.

The Russian government and public are enjoying a robust economy and see no need to compromise with Japan, he said.

Foreign Ministry sources say, however, that Russia realizes it cannot depend forever on oil and needs Japanese investment and technology to sustain its economic boom.

Last year, trade between the two nations reached a record high $13 billion and the number of Japanese firms in Russia has increased twofold from five years ago to about 150. Among Japanese automakers, Toyota Motor Corp. is currently building a factory in Russia and Nissan Motor Co. has decided to establish a Russian plant.

Hakamada warned that focusing on strengthening economic ties alone may risk losing Japan’s leverage.

“If Russia’s economic development continues, Russia may think there is no need to resolve the territorial row because economic ties would bloom anyway,” he said, adding that maintaining good economic ties and resolving the isle dispute must be pushed simultaneously.

One of the sources said the important thing is for both nations to know what kind of relationship each side wants and then to broaden the horizons on areas of cooperation, and not limit them to traditional areas.

Just last month, Japan and Russia began negotiations for a nuclear cooperation accord to pave the way for Tokyo to outsource uranium enrichment to Moscow to recycle nuclear fuel.

Among other multilateral issues, Japan and Russia are cooperating on North Korea, Iran and climate change. The two are both Group of Eight nations and participants in the six-party negotiations on denuclearizing North Korea.

Abe is expected to meet with Putin on the sidelines of the G8 summit in Germany in June. Plans are also apparently under way for Abe to visit Russia by the end of the year.

As Japan continues to negotiate with Russia on the isles, it will be discussing “conditions and measures that will help create a favorable atmosphere for the negotiations,” a Foreign Ministry official said.

The government will have to wait and see whether Abe’s meetings with Putin and enhanced bilateral dialogue can create the environment that Japan desires for advancing the decades-old isle dispute.

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