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France and Russia Finally Reach Deal Over Suspended Warship Delivery

France will “fully reimburse” Russia for the aborted sale of two massive Mistral helicopter-carrying amphibious assault ships, the sale of which was suspended over the Ukraine crisis.
August 6, 2015, 8:25pm
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The long-running diplomatic saga over France's suspended delivery of two massive, Mistral helicopter-carrying amphibious assault ships to Russia reached a conclusion Wednesday, when France agreed to "fully reimburse" Russia for the two warships.

In a statement released Wednesday, the Élysée Palace confirmed the two countries had "reached a deal to end the contract signed in 2011 for the delivery of two Mistral-type projection and command ships." The government also said that the "Russian equipment installed on the vessels" would be "returned" to Russia.

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— Élysée (@Elysee)August 5, 2015

Mistral warships are versatile vessels capable of transporting helicopters and tanks, and can also serve as a floating military base or as hospital.

Russian President Vladimir Putin and French President François Hollande "welcomed the amicable and open partnership that had been fostered during the negotiation," which came to a conclusion Wednesday during a telephone call between the two leaders.

France's contract to equip Russia with amphibious warfare capabilities has been mired in political intrigue for the past two years, straining ties between Moscow and Paris. The dispute started when President Hollande froze the delivery of the second helicopter carrier in the wake of Russia's annexation of Crimea in 2014, making the delivery conditional on "Russia's attitude" with regard to the Ukraine conflict.

In February 2015, France suspended the delivery of both ships, in order to make sure Russia adhered to the conditions outlined in the Minsk ceasefire deal. On April 22, after meeting Ukrainian President Petro Poroshenko, Hollande said that the Mistral delivery was "not possible in the current context."

The 1.2 billion euro ($1.3 billion) contract, which was negotiated in 2008 and signed in 2011, under the presidency of Nicolas Sarkozy, included the building and delivery of two amphibious Mistral assault ships, the training of Russian sailors, and a technology transfer program granting Russia access to French expertise.

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The French government had earlier announced it would only compensate Russia to the tune of 784.5 million euros ($857.42 million) — a few million short of Russia's requested 1.16 billion euro ($1.27 billion) refund. Russia said that it was also seeking compensation for the amount invested in the training of 400 sailors, the development of four combat helicopter prototypes for use on the ships, and the upgrading of port infrastructure in Vladivostok — the Russian port that was to house the vessels.

On Thursday, Russian daily Kommersant reported that France had transferred over 1.1 billion euros ($1.2 billion) "in utmost secrecy" to a Russian bank as compensation for ending the deal.

Speaking to French radio RTL Thursday, French Defense Minister Jean-Yves Le Drian said that the "exact amount will be communicated to Parliament because there will be a ratification act and parliament will very soon discuss the amount and the procedure." Le Drian added that the reimbursement would be less than 1.2 billion euros.

Rumors of a deal first surfaced last Thursday in Russian media, triggering a denial by President Hollande, who said that "no agreement" had been reached "as of yet." Negotiations, he added, were underway, and he would "take a decision in the coming weeks."

Related: The Russia-France Warship Deal Is Turning Into a Total Mess

Speaking to VICE News on Friday, French defense expert Jean-Pierre Maulny, the deputy director of the French Institute for International and Strategic Relations (IRIS), said that the diplomatic back-and-forth with Russia has not weakened France's reputation as an arms supplier.

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"These are things that happen in this sector," he said. "It's not frequent, but as soon as there is an embargo on a country, many weapons dealers are stuck."

In 1994, France suspended the delivery of three submarines to South Africa — in line with sanctions imposed on the country as a result of the system of apartheid — and sold them to Pakistan instead.

France already owns three Mistrals, said Maulny, and "doesn't want another."

Maulny explained that the Mistral helicopter carriers are a popular vessel and that he was "confident" France would have no trouble finding a new buyer.

Speaking to RTL Thursday, Defense Minister Le Drian said that, "a number of countries, there are many of them, have expressed interest in the ships," adding that France now had "full ownership of" and could "freely dispose of" the two vessels.

Defense expert Maulny noted that, if France fails to find a buyer, "the EU could perhaps rent the ships for its operations abroad."

Follow Pierre Longeray (@PLongeray) and Pierre-Louis Caron (@pierrelouis_c) onTwitter

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