MOSCOW, June 22 (RIA Novosti) - Moscow Mayor Yury Luzhkov, a co-chairman of the Russian-Japanese Council of Wise Men, said today that Russia was interested in concluding a peace treaty with Japan.

However, the situation on this issue "was swiftly moving toward a deadlock," the mayor said at a forum of the Russian 21st Century Committee and the Japan-Russia Society in Moscow. The forum discussed the Russian-Japanese declaration of 1956.

"Russia is interested in signing a peace treaty with Japan and cooperating with it on mutually beneficial conditions," Luzhkov said.

However, Luzhkov said the situation was not improving but seemed to be approaching a deadlock as Russia and Japan had taken opposite positions and were not striving for rapprochement.

Luzhkov said Japan's "harsh statements" on the handover of the four Kuril Islands to Japan had exacerbated the situation.

The mayor also said the political situation in the Far East was changing rapidly due to the North Korean problem and China's growing economic influence. In these conditions, he said, "Japan should establish closer and stronger contacts with Russia to make the situation more balanced."

"This is equally important for Russia," he added.

Luzhkov said the sides should be calm and respect each other, avoiding the type of pressure that "could be seen on the streets near the Russian Embassy [in Tokyo]."

According to Luzhkov, the joint economic use of the disputed islands may help solve the problem.

Japan is demanding that Russia return four Southern Kuril Islands that the Soviet Union allegedly seized in 1945 during WWII.

Russia acknowledges there is a territorial problem with Japan but has rejected the ultimatum. It has proposed settling the territorial dispute on the basis of the 1956 declaration. In this case, Russia would cede two of the islands to Japan as a goodwill gesture after the conclusion of a bilateral political treaty on friendship.