Disputed islands are always so pretty! Here's what we're looking at:
If you're Russian you call them the Southern Kuriles and if you're Japanese you call them the Northern Territories. These islands were originally split down the middle between the two countries by the 1855 Treaty of Shimoda. These peaceful deliberations would continue in 1875, when Russia agreed to cede the entire Kurile Island chain to Japan in exchange for being the sole claimant on nearby Sakhalin Island (Japan and Russia had divided the island in half in 1855.)
This negotiated give and take would be shattered in 1904 when Japanese and Russian imperial ambitions towards Manchuria and Korea would lead to the first major war of the 20th century. Every battle was either a draw or an outright victory for Japan. The world at large was shocked at Japan's victories as it became the first non-western power to decisively defeat a Western country in war. The long term effects of this change in the regional order would be America encouraging Japan to have a free hand in Asia (documented masterfully in James Bradley's "The Imperial Cruise,") and Japan's continued aggression against its neighbors in the decade preceding World War II. The immediate effect on Russian territory was cession of the southern half of Sakhalin Island.
Japan's ascendancy wouldn't last, as we all know. It bit off far more than it could chew when it declared war on the United States and the British Empire. Although the Soviet Union and Japan remained at peace during virtually all of World War II, the Soviets invaded just as Japan was surrendering to the United States. In the week following the atomic attack on Nagasaki, Soviet soldiers landed in the Kurile Islands. Japan was powerless to prevent all of the islands between the northernmost Japanese home island of Hokkaido and the Russian peninsula of Kamchatka from falling under de facto Soviet control. This status has persisted to this day despite the break up of the Soviet Union, with Russia claiming suzerainty over the area.
Here's a quick breakdown of what the borders looked like at different times:
The Claimants
Russia:
As the successor state to the Soviet Union, Russia claims that agreements between the USSR and the western allies during the war stated that the whole of the Kurile Islands would be administered by the Soviets after Japan's surrender. This claim is somewhat contradicted in the writings of President Truman, who made distinctions between what Roosevelt and Stalin discussed, and what Truman, Stalin, and Churchill actually agreed upon. The Treaty of San Francisco, which ended the war, stated that the Japanese would renounce claims to the Kurile island chain, but did not state that the Soviet Union could have all the islands. This is one of the reasons that the Soviets declined to sign the Treaty, and a formal document of peace between Japan and the USSR/Russia has never been signed.
Japan:
The Japanese position is that some of the islands between Hokkaido and Kamchatka are not part of the Kurile Island chain, but rather they are offshore islands of Hokkaido. Specifically four islands/collection of rocks are not a part of the Kuriles. Japan can point out that historically the islands closest to Hokkaido were never claimed by Russia and never under Russian control (pre-1945), therefore the Japanese did not take them by force from anyone during any war. This is an important point because the Treaty of San Francisco was meant to strip Japan of territories acquired due to "violence or greed;" it was never meant to permanently dismember parts of Japan itself.
Recent events
For most of the time since the war the Soviets/Russians were uninterested in antagonizing the Japanese and did not make a big show of their possession of the disputed islands. This changed in the recent past as former President Medvedev visited the islands and Russian jets have been begun flying near them and Japanese airspace. This has resulted in nationalist protests in Japan, which has never accepted that Russia should control the islands closest to the Japanese home islands.
WAR?
Compared to the risk of conflict between China and Japan, even an accidental military clash seems nearly impossible. Even though the Russians have been reinforcing and modernizing their far Eastern Forces, their goal appears to be to maintain military parody with Chinese, rather than protecting a chain of sparsely populated and relatively unimportant islands. The Japanese, even with nationalist sentiment rising, still have a pacifist constitution that prohibits them using war as a means of attaining political goals. That could change, but it won't change soon.
Still, if it was up to this guy...
America
It takes a little bit of digging to find the American position on the dispute, but according to the State Department's website, the United States supports Japan's claim to the Northern Territories (http://www.state.gov/outofdate/bgn/japan/10834.htm.) This is the really the least America can do, since it prevented the Soviets and Japanese from signing a peace treaty in the 60's which would have returned some of the islands to Japan.
