Japanese Prime Minister Yasuo Fukuda met with Russian President Vladimir Putin to discuss important issues such as climate change and a long-standing dispute over a group of Pacific islands. A senior Japanese official stated that Fukuda would emphasize the need for Russia to speed up negotiations to settle the territorial conflict over the islands, which has strained relations and prevented the signing of a peace treaty ending World War Two. Putin acknowledged the progress made in bilateral relations over the past few years and expressed commitment to continuing discussions on the peace treaty. He also noted that while trade between the two countries has increased significantly, there are still many unresolved issues that need to be addressed. Fukuda is scheduled to hold discussions with Dmitry Medvedev, who will be inaugurated as the head of state on May 7. Putin, who has served as president for eight years, will continue as prime minister and leader of the largest party. According to a Japanese foreign ministry official, Fukuda's primary objectives for the visit are to establish a trusting relationship with President Putin and President-elect Medvedev and to prepare for the upcoming G8 summit. The islands, known as the Southern Kuriles in Russia and the Northern Territories in Japan, were taken by Soviet troops in the final days of World War II. They are located just north of Hokkaido, where Japan will host this year's Group of Eight summit. Japan is prioritizing the search for a better alternative to the Kyoto Protocol on climate change, which will end in 2012, during the G8 summit. Tokyo is aiming to create a new climate change agreement that includes major polluters like the United States, China, and India, who did not sign the Kyoto Protocol. Russia, a G8 member, was one of the largest developing economies to commit to the Kyoto Protocol. Japanese officials are optimistic that Russia will also support a new agreement in Hokkaido. A senior Japanese government official stated that Prime Minister Fukuda plans to encourage Russian leaders to speed up discussions to resolve the territorial dispute. Fukuda is expected to emphasize the need for both countries to engage in concrete negotiations to improve bilateral relations. While Russia has expressed willingness to discuss the issue, they have not indicated any intention to relinquish control of the islands. A Kremlin official stated that they do not anticipate any significant progress in talks with Fukuda. In 2007, the trade between Russia and Japan amounted to $20 billion, driven by companies like Toyota Motor Corp establishing factories to access the growing Russian market. However, this trade volume is significantly lower than that between Russia and its main trading partner, the European Union. Japanese companies have invested in large oil and gas projects on Russia's Pacific Sakhalin island, and there is currently a pipeline being built to transport oil from eastern Siberia to the Pacific coast in the future.