MOSCOW, September 7 (RIA Novosti) - "The Mistral deal has not been cancelled by Paris so far and the delivery of the first ship has been made conditional to the achievement of a ceasefire between Russia and Ukraine. In this context, the reason behind this delay is mostly pressures coming from many NATO members," Dr Aude Fleurant, Director of the new SIPRI (Stockholm International Peace Research Institute) Arms Transfers and Arms Production Programme, told Radio VR.
NATO’s concerns about the Mistral deal have grown due to the Ukrainian crisis and Moscow’s position on the situation. The NATO summit also also may have influenced Frances decisions, as it "might have put France in a very difficult position with the [sic] allies and led it to a decision which is mostly a compromise," Fleurant added.
Breaching of the Mistral contract would cause a series of major economic problems for France. The deal is worth 1.2 billion euros and Russia has reportedly paid most of it. A breach of contract would mean France would have to reimburse that money. Additionally, Paris could be liable for an extra 251-million-euro penalty payment, according to French media reports. A union representative at STX, the French construction firm building the Mistral ships, said that failure to deliver could threaten hundreds of French jobs. Fleurant supposes that it’s very hard to consider a possible breach of the Mistral deal in terms of a "zero-sum game", where economic losses can be compensated by political gains.
"The question of the economic losses for France, if the contract is cancelled, is a very big part of the debate in France. […] The naval shipyards and the companies have very big concerns about this possibility and the indemnities that may have to be paid to Moscow if that is the case. But it’s also reasonable to mention that France now would very much like to gain market shares in other Eastern European states. And its current position on the Mistral has also had both political and economic costs for this market. So it’s kind of an in-between situation where one choice may have consequences for other choices and it’s a very delicate calculus for the country," she thinks.
Fleurant also believes that even if relations between Russia and NATO continue to deteriorate, France is unlikely to sell the Mistrals to other countries, especially to Ukraine. "Though it may be stressed that states elsewhere in the world, mostly in Asia, could possibly be interested in some point in the future in this kind of ships, but this is very much speculation for now," she said.
In respect to the technical side of the issue, Fleurant stated that the Mistral-class ships are command and control ships, so for the Russian military "they would not actually be a very big game changer". They would give Russia limited power projections capabilities, unlike an air-craft carrier. However, "the electronic system on board, the command and control system seem to be a stake for the Russian defense industry". "It is well known that Russia is a bit lagging in command and control systems compared to Western suppliers and Western countries and the acquisition of this electronics will allow Russia to catch up a little bit on these capabilities," the speaker presumed.
The delivery of the Mistral warships to Russia depends on how the situation will develop in eastern Ukraine in the coming weeks, French President Francois Hollande said on Friday. He set out his conditions as "a ceasefire and a political settlement" of the Ukrainian crisis, which must be met for the Mistral contracts to be fulfilled. On Thursday, an unnamed French diplomat said the Mistral deal was suspended until November. Earlier, Francois Hollande said that France would fulfill its contract obligations and deliver first Mistral ship to Russian as scheduled, but the work on the second one would be depend on Moscow’s position on the Ukrainian conflict.
Russia and France signed a $1.6 billion deal for two Mistral-class ships in June 2011. Under the contract, each Mistral ship is due to be built by France within 36 months. The first ship, the Vladivistok, is scheduled to be delivered to Russia in October or November. The second one, the Sevastopol, is due for delivery in 2015.
The completion of the deal became at risk after Western countries imposed sanctions against Russia over its alleged role in the escalation of the crisis in Ukraine.