NAGATO, Japan (Reuters) - Japan and Russia agreed at a summit on Thursday to revive security talks and start discussing economic cooperation on disputed islands at the core of a row that has kept them from signing a peace treaty formally ending World War Two.

Japanese Prime Minister Shinzo Abe and Russian President Vladimir Putin smile during their meeting at a hot springs resort in Nagato, Japan, December 15, 2016. REUTERS/Alexander Zemlianichenko/Pool

Japanese Prime Minister Shinzo Abe and Russian President Vladimir Putin also talked about Syria, with Abe conveying to Putin his concern over the deteriorating humanitarian situation and Putin offering to work with other countries to settle the Syrian problem, a Japanese government spokesman said.

Russia faces Western criticism over the destruction of eastern Aleppo in Syria, where Russia is backing Syrian President Bashar al-Assad’s forces.

“On Syria, Prime Minister Abe expressed strong concern over the deteriorating humanitarian situation, and stressed the importance of returning to the halt of hostile conduct and implementing humanitarian aid,” Japanese Deputy Chief Cabinet Secretary Kotaro Nogami told reporters after the two leaders met for about three hours at a hot spring resort in southwest Japan.

“President Putin stated he is supporting President Assad who is an elected leader. He also said he is ready to talk to countries in the region and the United States to work toward the resolution,” Nogami said.

Abe and Putin are seeking progress in a two-day summit on their dispute over the four windswept isles in the western Pacific controlled by Russia but also claimed by Japan. They will meet again in Tokyo on Friday.

“We were able to hold the summit in a very good atmosphere,” Abe told reporters after the meeting.

“I think we were able to have frank and deep discussions about free travel by former island residents, economic activities on the four islands under a special system of both countries, and the peace treaty issue.”

The islands, known in Japan as the Northern Territories and in Russia as the Southern Kuriles, were seized by Soviet forces in the final days of World War Two and their 17,000 Japanese residents were forced to flee.

Russian Foreign Minister Sergei Lavrov told reporters Putin had offered to resume security talks between their foreign and defence ministers, suspended after Russia annexed Ukraine’s Crimea region in 2014, triggering Western sanctions.

Abe reacted positively, Lavrov said.

Kremlin economic aide Yuri Ushakov said the two sides would issue a statement about possible joint economic activity on the disputed islands on Friday, adding such activity would be based on Russian legislation.

Nogami, however, reiterated Japan’s policy that any joint economic activity on the islands should not infringe on Tokyo’s legal stance, underscoring a potential source of discord.

The two sides are also likely to clinch agreements on economic cooperation in areas from medical technology to energy.

But both have sought to dampen expectations of a breakthrough in the feud over the islands off Japan’s northern island of Hokkaido.

‘RUSSIAN WORRIES’

Abe has pledged to resolve the territorial dispute, in hopes of leaving a diplomatic legacy that eluded his foreign minister father, and of building better ties with Russia to counter a rising China.

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But a deal to end the dispute carries risks for Putin, who does not want to tarnish his image at home of a staunch defender of Russian sovereignty.

The isles have strategic value for Russia, ensuring naval access to the western Pacific.

Putin also told Abe of Russia’s concerns about the U.S. presence in Asia, which Russia thinks is disproportionate to the North Korea nuclear and missile threat, Lavrov said.

“We thought that our Japan colleagues started to understand Russian worries in this regard better,” he said.

Japan has long insisted that its sovereignty over all four of the disputed islands be confirmed before a peace treaty is signed.

But there have been signs it has been rethinking its stance, perhaps by reviving a formula called “two-plus-alpha”, based partly on a 1956 joint declaration in which the Soviet Union agreed it would hand over the two smaller islands after a peace treaty was signed.

Over the decades, the two sides have at times floated the idea of joint economic activity on the islands, but how to do that without undercutting either side’s claim to sovereignty has never been resolved.