National pride prolongs battle of the islands: Russia and Japan are raising the stakes in a wrangle that has dogged relations between them for 47 years. Terry McCarthy reports from Tokyo

RUSSIA and Japan have locked themselves into a deadly earnest battle of wills over the Kurile Islands, and neither side is showing any sign of backing down.

The four misty islands in the Pacific are commanding ludicrously high stakes - political and economic normalisation between the world's largest and the world's second richest country. But national pride, sometimes brimming over into open insults, is running high in both countries.

Mikhail Poltoranin, the Russian Deputy Prime Minister, has just concluded a week-long visit to Japan, during which he met Kiichi Miyazawa, the Japanese Prime Minister, to discuss the problem. But little progress was made on the issue, which has dogged relations between the two countries for four decades and is the reason why Japan and Russia are still technically at war.

Mr Poltoranin's suggestion to Mr Miyazawa that Russia might give back two of the four disputed islands as a compromise was immediately attacked by conservative politicians back in Moscow, who fear President Boris Yeltsin will be persuaded to give up the islands in exchange for Japanese economic aid when he visits Tokyo in September.

Early last month President Yeltsin himself plunged into the fray by accusing Japan of not contributing 'even half a yen' to Russia's economic reconstruction. This outraged Japanese officials, and two weeks later Shin Kanemaru, one of the most influential power-brokers within Japan's ruling Liberal Democratic Party, said that the Russians were habitual liars, and could not be trusted in negotiations.

Russia invaded the Kurile Islands at the end of the Second World War. Japan technically ceded control of the islands to Russia at the San Francisco Peace Conference in 1951, but in the mid-Fifties reversed its position on four of the islands - Etorofu, Kunashiri, Shikotan and Habomai - claiming that, historically, they had always been Japanese. In 1956 Moscow proposed returning the two smaller islands, Shikotan and Habomai, in exchange for the signing of a peace treaty, but this was never carried out. Today Tokyo says it will not give any substantial aid to Moscow until Japanese sovereignty over all four islands is acknowledged.

Mr Poltoranin's visit was intended to prepare for President Yeltsin's arrival in mid-September. In an attempt to soften the Japanese stance, he proposed that Russia could give some of its space technology to Japan, whose domestic rocket-building programme has been plagued with problems. Mr Miyazawa responded that Japan could be flexible on the islands' return, 'if we agree on basic principles' - a euphemism for concessions on sovereignty.

Neither side wants a repeat of last year's visit to Japan by Mikhail Gorbachev, when the former Soviet leader failed to make any progress and left empty- handed.

But the resistance by hardliners in Moscow to any concessions over territory, coupled with Tokyo's demand for the return of sovereignty over all four islands, leaves President Yeltsin with very little room to manoeuvre. There is some speculation that he may even postpone his Tokyo trip.

(Map omitted)