The Japanese government is bitterly disappointed that Russian President Vladimir Putin’s trip to Japan last week failed to make any progress in resolving a long-running territorial dispute that has prevented the conclusion of a peace treaty between the two countries to formally end World War II.

Japanese Prime Minister Shinzo Abe, who has held 15 previous meetings with Putin, met with the Russian leader over two days on Thursday and Friday. The high-profile visit had been planned well in advance but was delayed by Russia’s annexation of Crimea in 2014.

Expectations were high in Tokyo that steps would be taken toward a settlement in the dispute over the Kurile Islands, known as the Northern Territories in Japan, which were occupied by the former Soviet Union at the end of World War II. Japan has insisted that the islands, to the north of Hokkaido, are part of its territory.

The framework for a settlement was established in 1956 with the signing of a Soviet-Japanese Joint declaration that held out the possibility of returning the two islands closest to Japan—Habomai and Shikotan—while the Soviet Union would retain the larger two islands—Etorofu and Kunashiri. The handover, however, was conditional on the conclusion of a peace treaty, which was undermined by Cold War tensions, the strengthening of the US-Japan military alliance in 1960 and the continued presence of large US bases in Japan.

Putin was apparently aiming to use concessions to Japan over the Kuriles as a means of breaking Russia’s isolation following the imposition of US-led sanctions over Crimea. For his part, Abe was seeking better ties with Moscow as a means of weakening Russia’s relations with China and boosting his domestic standing by negotiating the return of at least some of the disputed islands.

However, two days of talks between the two leaders produced no breakthrough. There was no suggestion that a solution based on the 1956 declaration had been arrived at. Even before the discussions, Putin deflated expectations by linking any deal to an easing of Japanese sanctions on Russia, declaring to the media: “How are we going to have further economic relations on a new and higher basis, at a higher level under a sanctions regime?” Abe had ruled out any change to Japanese sanctions.

According to Abe, Putin put a question mark over the 1956 declaration by claiming that it did not specify the sovereignty of the two islands to be handed back. At his joint press conference with Abe, Putin also suggested that the two islands would have to be exempted from the US-Japan Security Treaty, forcing Japan to negotiate with the US and further complicating any resolution.

Both sides attempted to put the best possible face on the outcome. About 80 business deals were reached between companies and government bodies from both sides. A senior government official told the Japan Times that the total in investments, loans and credit lines to Russia was worth 300 billion yen ($US2.6 billion).

Even the proposals for joint economic activities on the disputed islands became bogged down after Russian officials insisted that Japanese companies operating in the Kuriles should pay taxes to Russia. The Japan Times noted: “The taxation issue may become the focal point at the talks, because allowing Moscow to collect taxes from Japanese firms on the islands would effectively amount to Tokyo’s recognition of Russian jurisdiction there.”

The failure of the talks led to comments and editorials that were uncharacteristically open in expressing displeasure. Lengthy diplomacy between the two sides had been underway that had led Tokyo to believe that a deal was about to be reached and that Russia was willing to make compromises.

Toshihiro Nikai, secretary-general of the ruling Liberal Democratic Party, told the media that “most of the Japanese public are disappointed at the results,” adding that it should be a lesson that “territorial negotiations are not easy.”

Various media commentators had speculated that Abe might call snap elections for the House of Representatives, the lower parliamentary house, to capitalise on a diplomatic triumph.

A Mainichi Shimbun editorial declared that the summit “dashed our hopes that repeated talks would move the Northern Territories issue forward and only left us to ponder the harsh reality of the situation.”

The newspaper pointed to the obvious reason for Putin’s about-face: “The US administration is in the midst of transition from one led by President Barack Obama, who initiated the introduction of international sanctions against Russia, to one led by President-elect Donald Trump, who advocates cooperation with Russia.”

It declared: “Russia has likely begun reviewing its policy towards Japan in the face of the coming change of government in the United States,” then concluded: “The Abe administration is faced with the need to drastically review its foreign policy to determine how to proceed with territorial talks with Moscow.”

The talks between Russia and Japan and their breakdown are another symptom of the intensifying manoeuvring and rivalry between the major and regional powers amid the deepening global economic breakdown and heightened uncertainty generated by the Trump’s election to the US presidency.