France may have to pay Russia over €1.1 billion for canceling a contract for the sale of two Mistral warships, according to reports from Russian media.
France agreed to sell the warships to Russia in 2011 under then-president Nicolas Sarkozy. After strong opposition from the EU and the U.S., especially since the escalation of the conflict in Ukraine, current French President François Hollande suspended the deal last year.
Since then, the countries have been negotiating the fate of the contract and how much France owes Russia if it decides to terminate. Russia has already paid at least some of what it owes for the ships, and money has also been spent on facilities and training in anticipation of the delivery of the Mistrals.
It is unclear whether the over-€1.1 billion quoted in Russian reports represents a refund of money already paid for the warships, or also includes compensation.
Vladimir Kozhin, a senior figure in the Putin administration, told Russia’s RIA news agency that a deal had been reached. “The talks are already over, everything is already decided, both the timeframe and the sums,” he said.
“I have expressed some concerns…about continuing significant defense deals with Russia at a time when they have violated basic international law and the territorial integrity and sovereignty of their neighbors” — Barack Obama
French authorities would not confirm that a deal had been made.
A spokesperson for the French foreign office referred to the president’s statement on July 27 “that he will take a decision on this subject in the coming weeks. We do not have further elements to add.”
Pressure building
The French government has faced continued pressure to pull out of the deal since it was signed.
At a press conference in Brussels in June last year, U.S. President Barack Obama said: “I have expressed some concerns — and I don’t think I’m alone in this — about continuing significant defense deals with Russia at a time when they have violated basic international law and the territorial integrity and sovereignty of their neighbors.”
The first warship should have been delivered last year, but this was delayed due to Russia’s involvement in the Ukraine crisis. Hollande stopped short of canceling the contract at the time.
The Mistrals have already been built by the French company DCNS. They are made to carry over a dozen military helicopters and hundreds of troops.
Whether France will be able to find an alternative buyer remains to be seen. Le Figaro reports that adapting the ships for a different country’s needs could cost hundreds of millions of euros, according to Hervé Guillou, CEO of DCNS, while maintenance costs for the two ships are at least one million euros a month.
POLITICO contacted the office of Kozhin and the Kremlin’s press service but they declined to comment.
Jacopo Barigazzi and Antoine Sander contributed to this story.