Putin in Tokyo for oil and territorial talks
(Reuters)
Updated: 2005-11-20 19:59

Current trade turnover between them is about $10 billion, a tiny proportion of Japan's trade with China or the United States.

Officials said that a lack of progress on the islands issue was likely to prevent Putin and Koizumi from signing a key "political declaration" emphasizing their intention to intensify work to break the territorial deadlock.

"Given our different positions over the territorial issue, at the moment, it looks extremely difficult for us to come up with a new document," said a Japanese foreign ministry official.

While avoiding the islands issue, Putin and Koizumi will try to focus on economic ties. Japan will try to coax guarantees from Russia to build its huge oil pipeline to the Pacific rather than to China. Under Tokyo's ideal scenario, the pipeline would put up to 1.6 million barrels a day to a port close to Japan.

Although Putin will try to avoid a clear answer on the pipeline issue, he will try to squeeze money out of Japanese investors to develop Russia's resources-rich but poor Eastern Siberian regions.

"Economy and trade matters have to push politics forward, not the other way around," a Kremlin official told Reuters.

They will also discuss projects in Russia's Sakhalin island, as well as cooperation between the world's No 1 gas company, Gazprom, and Japanese firms in natural gas projects.

Russia and Japan have stubbornly refused to budge from their long-held positions on the islands, with Japan saying it won't sign a peace treaty unless they are returned.

Russia has offered to hand over two of the islands but Japan firmly rejected the proposal which was based on the 1956 Japan-Soviet declaration.

Despite rising tensions in the highest echelons of diplomacy, people on the streets of Tokyo seemed more indifferent.

"We think the islands are ours. Russia thinks they are part of Russia. Well, what can I say, it's just a very unfortunate arrangement," Minako, an office worker, said on a central Tokyo street festooned with flapping Russian and Japanese flags.