France will refund all of the money Russia already paid for two undelivered Mistral warships, but the final sum will be lower than the almost €1.2 billion Russian media reported last week.
The two countries signed a contract for the sale of the warships in 2011. The first ship was to be delivered in 2014. But under significant pressure from the EU and U.S. over the Ukrainian conflict, French President François Hollande suspended the deal last year.
Since then, Russia and France have been locked in talks about how much money France will have to pay to terminate the contract. Russia wanted a refund of the amount it had already paid (reported to have been €785 million), and compensation for money spent training troops and purchasing Mistral-compatible helicopters. France wanted to minimize the refund.
Russian media reported a deal had been done last week and speculated France would have to cough up close to €1.2 billion. The French foreign office denied this and told POLITICO negotiations were ongoing.
On Thursday, the French confirmed that Russian President Vladimir Putin and Hollande had reached an agreement.
The official statement released by Hollande’s office made no mention of whether Russia would be repaid the additional costs.
In an interview on French radio station RTL, Defense Minister Jean-Yves Le Drian, said, “France will reimburse all costs incurred by Russia related to the acquisition of these ships. Their initial price was €1.2 billion. The [sum France will have to pay], which is the best possible, will be lower since Russia will be refunded the financial commitments it has been able to mobilize.”
Le Drian confirmed the contract was terminated because of Russia’s role in the Ukrainian crisis.
“The crisis is still there,” he said. “It seemed to the President that it was not desirable to add risk to the threat and to deliver these two ships.”
France will have to destroy all Russian equipment on-board the Mistrals, but will retain ownership of the ships and look for alternative buyers. This is good news for the country, as the warships have already been built and reportedly cost €1 million a month to maintain.
The French foreign office did not return POLITICO’s request for comment before publishing.