Japanese Prime Minister Yasuo Fukuda and Russian President Vladimir Putin met on Saturday to discuss various issues, including climate change and a longstanding dispute over a group of Pacific islands. Fukuda is expected to urge Russia to speed up negotiations to resolve the territorial dispute, which has strained relations between the two countries and prevented them from signing a peace treaty ending World War Two. Putin acknowledged the positive changes in the relationship between Japan and Russia in recent years and expressed willingness to continue dialogue on the peace treaty. He also mentioned that bilateral trade has increased significantly, but there are still many unresolved issues that need to be addressed. Fukuda will hold discussions with Dmitry Medvedev, who will be inaugurated as 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 main objectives during the visit are to build a personal relationship of trust with President Putin and president-elect Medvedev, and to prepare for the upcoming G8 summit. The islands, called the Southern Kuriles in Russia and the Northern Territories in Japan, were taken by Soviet troops at the end of World War Two. They are located just north of the northern island of Hokkaido, where Japan will host this year's Group of Eight summit. Japan is prioritizing the search for a more efficient alternative to the Kyoto Protocol on climate change, which will expire in 2012, during the G8 summit. Tokyo aims to create a climate change agreement that includes major polluters like the United States, China, and India, none of which have agreed to the limitations set by the Kyoto Protocol. Russia, a G8 member, was one of the significant emerging economies that agreed to the Kyoto commitments. Japanese officials are optimistic that Moscow will back a new agreement in Hokkaido. A high-ranking Japanese government official stated that Prime Minister Fukuda plans to encourage Russian leaders to speed up discussions in order to settle the territorial dispute. The official mentioned that Fukuda is likely to emphasize the importance of both countries making progress in negotiations to improve their relationship. Despite Russia's willingness to discuss the issue, they have not shown any intention of relinquishing control of the islands. A Kremlin official mentioned that they do not anticipate any significant progress in the talks with Fukuda. In 2007, the trade between Russia and Japan reached a value of $20 billion, driven by companies like Toyota Motor Corp establishing factories to take advantage of the growing Russian market. However, this trade volume is much lower compared to the trade between Russia and its primary 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.