France Pays Russia €950 Million for Cancelled Mistral Deal

On September 8 the French government informed parliament that it had refunded Russia €949.7 million for two Mistral helicopter carriers put on hold by President Francois Holland, as part of the sanctions against Russia over Moscow’s alleged involvement in the Ukrainian crisis.

The compensation agreed during two rounds of talks between Russia’s Deputy Prime Minister Dmitry Rogozin and Secretary-General for Defense and National Security of France, Louis Gauthier, “includes the €839 million we received from Russia as a down payment for two Mistral ships, and a refund of an additional €56.5 million as compensation for carrying out required research and development work,” the government’s report said.

This involved work to modify the Kamov K-52 helicopter to meet the navy’s needs, to conduct personnel trainings on how to operate the Mistral vessels, and also to construct the landing pier for Mistral ships in Russia’s Pacific port of Vladivostok.

Russia has given France permission to sell the ships to a third party and also agreed not to sell the navigation gear and other technology it had been handed by the French for use on two more Mistral ships slated for construction in Russia.

The list of potential buyers of the two amphibious helicopter carriers is led by Egypt and Saudi Arabia.

With the technical standards of the Egyptian Navy being close to Russia’s, the price Cairo would have to pay could be lower, as the amount of technical readjustment would be minimal.

The Mistrals contract, worth €1.2 billion ($1.3 billion), was signed by France’s DCNS/STX and Russia’s Rosoboronexport in 2011. The contract specified that two French helicopter carriers would be delivered to Russia, the first in 2014 and the second in 2015.

Russia was to partly manufacture the vessels’ hulls and provide its own military electronic equipment for the warships.