MOSCOW, November 21 (RIA Novosti) - Russia and Latvia may sign a border agreement in the first half of 2007, the Latvian ambassador to Moscow said Tuesday.

Talks on a border treaty between Russia and Latvia stalled over territorial issues inserted by the former into a new version of the agreement, and Latvia's claims for compensation over what it terms the Soviet "occupation."

Ambassador Andris Teikmanis said the new governmental declaration adopted following parliamentary elections in Latvia listed the signing of an agreement with Russia as a priority.

"The government is interested in resolving this problem," he said.

A Latvian-Russian border treaty dating back to 1997 remains unsigned and un-ratified, because Latvian politicians have sought to link the border settlement to a declaration from Russia admitting Soviet aggression during World War II, as well as concessions on other issues.

Latvia has included a unilateral explanatory declaration to the draft border treaty, which allows it to claim Russian territory - the Pytalovo District in the Pskov Region - that was part of Latvia before World War II and was annexed by Russia in 1944.