"In the current situation, we are forced to suspend the implementation of the 1998 Agreement until the Japanese side fulfills all its financial obligations," foreign ministry spokeswoman Maria Zakharova said in a statement.
A territorial dispute over the islands, known in Russia as the Kurils and in Japan as the Northern Territories, dates back to the end of World War Two when Soviet troops seized them from Japan. The row has prevented the two countries from signing a formal peace treaty.