Unless Japan and Russia boost efforts to improve relations in every possible field, the two countries may not be able to attain their goal of signing a peace treaty by the end of 2000, Russian Ambassador to Japan Alexander Panov said Monday.

"The two countries have to create a special atmosphere to successfully conclude negotiations (for the treaty)," Panov said in a speech at a meeting sponsored by the Research Institute of Japan, an affiliate of Jiji Press. "The two countries have a huge potential in every field to improve relations, but only less than 50 percent of the potential has been utilized," Panov said, adding that concluding a peace treaty will be difficult without fulfilling the potential.

Tokyo and Moscow have not yet signed a peace treaty due to a long-standing territorial dispute over a group of islands off Hokkaido that Russia won from Japan at the end of World War II.

Prime Minister Ryutaro Hashimoto and President Boris Yeltsin made a breakthrough in bilateral relations last November at an informal summit by agreeing to make efforts to conclude a peace treaty by the end of 2000.

Without a fundamental improvement in the bilateral relationship, any peace treaty would not be approved by the people and the legislatures of the two countries, Panov said. The envoy said expanded trade with and investment from Japan are an important factor to improve overall bilateral relations and to establish a new type of bilateral relationship.

"Economic relations between the two countries are weak, as the Japanese economy sees no problem without a connection with the Russian economy, and vice versa. But without a strong relationship, the two countries cannot establish new type of ties," Panov said.