Japanese Prime Minister Shinzo Abe is reportedly set offer President Putin the Kuril islands in exchange for investments into the infrastructure of Russia's Far East and Russian IT-technologies, some sources close to Japanese diplomatic circles told Russian newspaper Izvestia.

During President Putin's visit to Japan, which is set to take place in December, Japanese Prime Minister Shinzo Abe is reportedly set to tempt the Russian leader with a package of investment projects in exchange for the return for the South Kuril Islands, the center of its territorial dispute with Russia, the newspaper says.

"The Japanese have concentrated on two small islands, Shikotan and Habomai. The main thing for Tokyo is to begin the exchange process or at least the discussion of such a process," the newspapers quotes its source as saying,

"However part of the Japanese establishment insists on negotiating the exchange of all the four islands," the newspaper adds.

Japan is ready to invest in Russia's Far East, the outlet says, adding that Tokyo is offering to finance infrastructure over the long term, which includes putting money into roads, hospitals and other city infrastructure.

It also wants to invest into Russian IT-technologies.

According to the source of the newspaper, specific figures have not been voiced, however the sum which is being discussed is around $200 billion over ten years in exchange for the Kuril islands. The offer also includes the construction of 100 infrastructure projects.

Meanwhile Japanese Prime Minister Abe expressed his confidence about making progress in solving its long-standing territorial dispute with Russia.

"I have a strong feeling of confidence about finding a way to make progress in the negotiations," Abe said at a meeting of the Budget Committee of the House of Representatives.

Moscow and Tokyo have never signed a permanent peace treaty after World War II due to a disagreement over four islands, which Russia calls the Southern Kurils and Japan the Northern Territories. The disputed islands, located in the Sea of Okhotsk, were claimed by Soviet forces at the end of the war.

According to former Japanese Foreign Ministry official Kazuhiko Togo, the peace treaty would be beneficial to both countries.

"The two countries have a historic chance to reach a deep understanding. Economic relations between the two countries could be called an engine of their bilateral cooperation," the former diplomat told the newspaper.

"However It is very important that everything which has been agreed upon between Russia and Japan is not directed against third countries," he added.

Valery Kistanov, head of the Center for Japanese Studies at the Institute of Far Eastern Studies of the Russian Academy of Sciences pointed out how the Japanese tactics over the territorial dispute have recently changed.

"Previously, Japan was associating the Kurils issue with politics. Now that emphasis has shifted towards the economy," he expert told the newspaper.

He further noted that now economic cooperation and investments are coming to the forefront. The Japanese leaders want to create a favorable atmosphere which will be noticed by Russia.

The expert also noted that the Japanese Prime Minister is betting on his personal relationship with President Putin, something which he is not hiding.

Kistanov said that the activation of the dialogue on the Kuril Islands is connected first of all with the upcoming Japanese elections. September 2018 will mark the end of Shinzo Abe's term as prime minister.

His view is echoed by Vasily Molodyakov, Professor of the Japanese Takushoku University, who says that Abe, as an ambitious politician, is hoping that this approach will, if not solve the solution, will at least make considerable progress towards the eventual resolution.

"The Japanese Prime Minister is trying to demonstrate that he undertakes enormous efforts. And even if he is not successful, he would be able to say that he has done his utmost," the expert said.