Russia and Japan are struggling to make progress on resolving a dispute over four islands off Hokkaido that dates from the end of World War II amid opposition in both countries to territorial concessions.

Negotiations are deadlocked, according to three officials from Japan and Russia, speaking on condition of anonymity because the matter is confidential. The disagreement over the territories, which Russia controls, has prevented the two countries from signing a peace treaty that could help transform relations.

Russian President Vladimir Putin is sticking to demands that Tokyo first acknowledge Moscow’s sovereignty over the islands, which were seized by the Soviet Red Army in 1945. He and Prime Minister Shinzo Abe agreed in November to negotiate on the basis of a 1956 declaration under which the Soviet Union would return two islands following a peace accord, though they failed to make a breakthrough at a meeting in Moscow last month.

The fate of the remaining two islands is the biggest sticking point, with Tokyo unwilling to give up its claims on them, a Japanese official said.

Putin’s offer “is the best deal that could be on the table, but there doesn’t seem to be much hope left now,” said Andrei Kortunov, head of the Russian International Affairs Council, a research group set up by the Kremlin.

The two leaders, who’ve met 25 times since 2012, ordered Russian Foreign Minister Sergei Lavrov and his Japanese counterpart Taro Kono to continue discussions on the sidelines of the Munich Security Conference this weekend.

Almost three-quarters of Japanese don’t expect a breakthrough on the dispute, according to a poll released last month by the Sankei/FNN media group. Some 74 percent of Russians oppose a transfer of the islands, a survey by the Levada Center showed in November.

Putin, whose ratings have plunged because of depressed living standards and anger over pension reform, can’t ignore the will of the people, said one Russian official.

Settling the issue would enable Japan to improve ties with one of its largest energy suppliers and help it counterbalance the growing power of China, which Putin has courted. Russia is seeking more Japanese investment and to reduce the impact of U.S. and European Union sanctions over the Ukrainian conflict.