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Prime Minister of Japan Junichiro Koizumi: Today, as we receive President of the Russian Federation, Vladimir Putin, we are celebrating the 150th anniversary of the establishment of diplomatic relations between our countries. I welcome Vladimir Putin from the bottom of my heart. After signing the Russian-Japanese Action Plan in 2003, Russian-Japanese relations are developing successfully. With a view to expanding and further developing our cooperation we signed twelve Russian-Japanese bilateral documents. Next year the G8 summit meeting will take place in St Petersburg and I will participate in that meeting. We are also expecting the Prime Minister of the Russian Federation, Mikhail Fradkov, to visit Japan. Along with this we are going to organize other events to further encourage our relations at the intergovernmental level.

The international situation requires that we intensify our cooperation in all possible strategic areas. Our ministries of foreign affairs, heads of law enforcement agencies and special services are working on this, have begun a dialogue, and are also taking practical steps to further cooperation.

Concluding a peace treaty will be a decisive moment and we must work towards this in the most serious way so as to sign one in the near future. We confirmed this today. Until today President Putin and I have based ourselves on official documents and agreements and have confirmed our political will to find a mutually acceptable solution to this problem.

Regarding trade and economic relations between our countries, both of us welcome their development. We welcome the conclusion of talks between our countries concerning Russia's accession to the WTO, and we consider it important to further develop trade and economic relations between our countries.

The pipeline to the Pacific Ocean and cooperation in the energy sector is really mutually advantageous and important for our countries. In the near future it is necessary that we come to an agreement to quickly implement this project. We share the same opinion on this front.

Exchanges and ties are developing but in the next three years we intend to increase visits between citizens of our countries three times over, to reach four hundred thousand people. We also agreed to expand youth exchanges and next year we are planning a festival of Russian culture in Japan. We welcome this event and hope that it will be successful.

Already sixty years have passed since the end of the Second World War. In this respect, we asked Vladimir Putin to understand the feelings of very elderly people who, after the war, were interned for some time on Russian territory. Together with President Putin we arrived at the understanding that the Russian party will make efforts in this area.

I consider that our talks took place in a frank atmosphere and were fruitful.

Next year Russia will host the G8 summit. Reforms continue to be carried out and today we share common values. Regarding the northern territories, we really do have differences of opinion concerning how to best approach this problem. Nevertheless, we must overcome these difficulties. It will not be simple, but we must solve this thorny issue, and our opinions do coincide on this point.

Today, relations between Japan and Russia are on their highest level ever, and in the future we will strengthen them even further, so as to resolve outstanding disagreements.

This evening I invited President Putin to supper in the Japanese room of my residence and we will continue our conversation over Japanese dishes.

I would once again like to thank President Putin, as well as the ministers of the government of the Russian Federation and other high-ranking members of the Russian delegation for coming to Japan.

The floor is yours, Mr President.

President of Russia Vladimir Putin: Dear Mr Prime Minister!

Dear ladies and gentlemen!

As Mr Prime Minister already pointed out, today's visit to Tokyo takes place during an anniversary that is especially significant for our countries, since 150 years ago Russia and Japan established diplomatic relations. And it is natural that this symbolic event set the tone for this visit.

I would like to emphasize that the talks that took place were comprehensive and constructive. And their result is a substantial number of agreements whose signing you witnessed.

We discussed a wide range of bilateral questions based on the Russian-Japanese Action Plan Prime Minister Junichiro Koizumi and I adopted in 2003.

It is obvious that we paid a great deal of attention to the problem of the peace treaty. I would like to say at once that both Russia and Japan feel that it is necessary to find the solution to this issue based on partnership, mutual respect and trust.

At the same time we realize that settling such a delicate issue will not be easy. It requires good will from both sides, foresight and state thinking.

I consider it important that we explained the logic of our approaches to one another. And both sides expressed their readiness to continue dialogue on this sensitive issue.

The continued development of the whole range of our bilateral ties is in the national interests of our countries.

First of all I am referring to deepening political dialogue. I am inviting Mr Prime Minister to visit Moscow on an official visit. According to the invitation I received today from Mr Prime Minister, the Prime Minister of the Russian Federation will visit Japan next year.

In turn we are ready to receive the heads of the Japanese defence and the management of sea security departments. And also to renew the practice by which the chairmen of our countries' chambers of legislature exchange visits.

Besides this, there are certain fundamental directions towards deepening contacts in the economic, scientific, technical, cultural and educational spheres.

We designated developing our trading and investment partnership as one of our major tasks. Recently, this has become considerably more active. In 2004 the volume of Russian-Japanese trade attained seven and a half billion USD and this year it can attain ten billion USD.

I shall especially point out the revival of Japanese business activity in the Russian market. As you know, in 2005 in the Leningrad Region Toyota began constructing a major assembly plant. And we shall provide further support to Japanese business, including Toyota, so that they can successfully implement their plans in the Russian market. Besides this, we are working on questions linked to the participation of Japanese capital in new fuel and energy projects together with those already being implemented in the Sakhalin Region. And today our ministers signed an energy agreement which is the first important step towards expanding the energy dialogue and cooperating in other areas in the energy sector.

We also discussed a number of international problems. We agreed to mobilize joint efforts in the struggle against terrorism and Mr Prime Minister and I signed the corresponding document.

Undoubtedly, strengthening strategic stability, preventing and settling regional conflicts and supporting integration in the Asia-Pacific region is the important direction for Russian-Japanese cooperation.

The Japanese party expressed its intention to help the Russian G8 presidency that will take place in the coming year be successful. I am convinced that Japan's participation will be extremely constructive.

In conclusion I would like to thank the Japanese Prime Minister for his interest in deepening Russian-Japanese cooperation. And also for the concrete proposals he made regarding various areas in which we cooperate.

I would especially like to note that our conversation took place in a well-intentioned and very trusting atmosphere. This allowed us to discuss everything frankly, even the most difficult and sensitive questions.

The talks have shown the most important thing; as neighbours Russia and Japan both fully realize the practical benefits and the strategic importance of their relations. And they intend to continue building their long-term partnership relations.

Thank you for your attention.

Question (Nihon Keizai Newspaper): First a question to Mr Koizumi. Judging from what you said, one got the impression that there is a certain common ground in the discussion concerning the northern territories. Was there any progress regarding this issue, and did the Russian party make any offers concerning the joint economic development of these territories?

Junichiro Koizumi: Frankly speaking, right now we have different visions of the issue at hand. However, presently Japanese-Russian relations are now at a better level than they have ever been before and are developing in different areas. This augers well for concluding a peace treaty in the future. However for this we must continue to cooperate. In connection with this I would like to point that our talks were very frank and serious. Right now I will not say how all of this will develop and which steps can be undertaken in the future. However, we will continue bilateral negotiations and consultations, both between our ministries of foreign affairs and at all other levels, so as to make our approaches more compatible.

Question (Argumenty i Fakty): Mr Prime Minister, it isZ nice that you did not only talk about the problem of the islands. In connection with this, could you please explain in a little more detail and comment on how cooperation will develop regarding the delivery of Russian energy resources to Japan. Besides this, how much cooperation will there be in other spheres, and which projects do you consider most promising? Thank you.

Vladimir Putin: During this visit we really spoke a lot about the development of our relations in the economic sphere. And as you know, the Russian-Japanese Economic Cooperation Forum was devoted to this theme. Energy sources from different regions are already being delivered to the Japanese market and as I have just been told, both from the Black Sea and through the Mediterranean Sea. Of course, this is a very long route and economically very cumbersome. Deliveries from Sakhalin, within the framework of the projects Sakhalin-1 and Sakhalin-2, have already begun. Of course we see the prospects for developing and increasing such deliveries. In particular, within the framework of the Sakhalin-2 project as much as one third of all extracted liquefied gas will be delivered to the Japanese market. All these volumes have already been contracted for.

But of course this is not all. Japanese partners are studying the opportunities for them to participate in Russia's coal industry, including—and this was already mentioned during the meeting with business circles—one of the largest deposits in Yakutia.

Our work should not end with deliveries and extraction of crude energy. The electric power industry, nuclear energy and other areas not linked to energy are within our sphere of interests and are promising. This includes the high-tech sphere, and first and foremost the sphere of communications. Today one of the documents we signed was to create a necessary base for developing relations in this area. In the sphere of joint space exploration we already have an existing programme, and the task consists in prolonging the agreements that have been achieved in the near and intermediate future.

All of this constitutes our assets for possible cooperation in the near future. I repeat that in practice this mechanism has already started and it is only necessary to support these areas in which we are active to arrive at qualitatively new levels. All of this is possible and I think that we shall achieve these results.

Junichiro Koizumi: We discussed economic cooperation and certainly, we discussed the question of building a pipeline to the Pacific Coast. Regarding the Sakhalin project, this project is one successful example, but we are not stopping at this and are thinking of other bilateral projects. We understand that this is very important. And from this point of view the construction of the Pacific pipeline is not only in Japan's interests but also in Russia's. Presently experts from both sides are studying the possibilities to further work in this direction.

Question (Dzidzi Tsusin): On September 27 at a press conference you said that the islands are sovereign territory, that this is the result of the Second World War and fixed in international law, and that you are not preparing to negotiate with anybody. You said something along those lines. Did your position on this question change today during the meeting with Mr Koizumi? And a question regarding the Tokyo Declaration of 1993. Is it still in force?

Vladimir Putin: At our meeting in Pusan several days ago, it seems to me that Mr Prime Minister very precisely and correctly formulated the development trend of relations between all countries and, with reference to Japan, those of the Asia-Pacific region in particular. Mr Prime Minister better knows what he has said than I do, and I shall reiterate only the general traits. He said that yes, there are problems that remain from the past but we do not consider them insurmountable. More than this, we consider that our neighbourly relations as a whole are normal, and that time is needed for some of them to loose the acrimony they have today. I completely agree with such a characterization of the question and would just add that I hope such an attitude will also expand to relations between Russia and Japan.

As to my answer to a question from one of the viewers during the live television dialogue, I wish to thank you for how attentively you follow this question and try to understand it and inform your readers, listeners or viewers. I wish to thank you for that. But I regret that you were careless and did not mention the second part of my answer, and I completely reject the possibility that you could have done so on purpose. And so had you been more attentive, you would not have read only the first part but the second as well, and I have my answer here. True, in the first part I talked about the results of the Second World War and the fact that this question is fixed in international law. And is this not the case? It is enough to take these documents and read them to see that it is so. But if you had read what I said in conclusion, you would have read—I shall simply quote it once again: 'I hope and am really convinced that if we show good will, and Russia does have this good will, we will always be able to find a solution [to the problem] that suits both parties, a solution that will benefit the people living on these islands and benefit the peoples of Russia and Japan. If we show that we are willing to accommodate each other we can find a solution'. And it seemed to me that during today's meeting, Mr Prime Minister and I were convinced that both Russian and Japan share such a desire.

Question (TV Channel Rossiya): I have a question for both heads of state. You already talked a great deal about my Japanese colleagues' initiative regarding territorial questions, but do you not consider that the absence of a peace treaty prevents normal economic cooperation between our countries? By the way, Mr Koizumi, just recently while answering a question from one of the Russian newspapers, you said that you are interested in animating economic cooperation between our countries. And I am interested on what your position is based on. Thank you.

Junichiro Koizumi: True, between Japan and Russia there is a difference of opinions on this issue. However, we must seriously discuss what we can do in the future to make these different opinions coincide and to conclude the peace treaty which is really necessary for us. We already spoke about this today during the meeting. And economic relations in various spheres are developing very successfully—on an unprecedented scale and at an unprecedented level.

Regarding economic assistance and cooperation, we are going to deepen them even further so as to increase mutual trust and so that we can conclude a peace treaty in the future. Actually, recently many Japanese companies have become much more active in Japanese-Russian economic cooperation. Regarding the volume of trade between our countries, probably this year we will pass the ten million USD mark.

There was the Soviet Union and now there is Russia. We share common values and will develop cooperation in the most varied fields.

Regarding the differences in opinion that exist, nevertheless on our way to concluding a future peace treaty we shall create all the necessary conditions and atmosphere to enable this.

Vladimir Putin: Does the absence of the peace treaty hinder the development of trade and economic ties? In my opinion, it does. At any rate, it is not helping. It may constrain some business representatives. But I agree with my colleague, we will do all we can to solve this problem. I came here for this very reason. For this reason we invited the Prime Minister to visit the Russian Federation. I am grateful that he accepts this invitation. We are full of determination to work in this direction and solve all the problems that stand before us, and I think that it is absolutely possible to do so.