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Japan, Russia Make Scant Progress On Kuriles Dispute

President Dmitry Medvedev (left) with Japanese Prime Minister Taro Aso met on Sakhalin on February 18.
YUZHNO-SAKHALINSK, Russia (Reuters) -- Japan and Russia have made scant progress on resolving a decades-old dispute over a group of islands at a leaders' summit, even as they stressed the two states' growing economic ties.

Any major headway in the dispute over the islands, known as the Southern Kuriles in Russia and the Northern Territories in Japan, would have been a boost for unpopular Japanese Prime Minister Taro Aso, who suffered a fresh blow on February 17 when his finance minister quit after being forced to deny he was drunk at a G7 news conference.

"On the territories issue, we have agreed to speed up detailed work on a creative, out-of-the-box approach to resolving it within our generation," Aso told reporters after meeting Russian President Dmitry Medvedev on the island of Sakhalin.

Tokyo had hoped for a concession from the Russian leader, although analysts had predicted that the chances of a breakthrough were slim without a bold new proposal from Japan.

Asked what new approach the two leaders had discussed at the meeting, Aso said only that the two sides would remain at an impasse if they stuck to past positions and that the issue needed a political decision rather than talks among bureaucrats.

A Japanese official later told reporters that Medvedev's stance for a fresh approach could push working-level talks forward.

Aso's daytrip was the first to Sakhalin by a Japanese leader since it was seized by the then Soviet Union, along with a chain of neighbouring islands, in the last days of World War II.

Japan still lays claim to the group of small islands, which lie amid rich fishing grounds close to Russian oil- and gas-production regions.

Neither side accepts the other's claim of sovereignty over the sparsely populated islands, the closest of which is just 15 kilometers from Japan's northernmost island of Hokkaido.

Despite the territorial row, which has prevented the two sides from signing a peace treaty ending World War II, economic ties have flourished as Japan eyes Russia's growing consumer market and its booming oil and gas industries.

Aso was in Sakhalin for the debut of Russia's first liquefied natural gas (LNG) plant in the Sakhalin-2 oil and gas project, a venture in which Japan's Mitsui & Co. and Mitsubishi Corp. are minority shareholders.