20 March 2014, 15:30

Russia will demand compensation if France breaks off Mistral deal - Moscow

Russia will demand compensation if France breaks off Mistral deal  - Moscow

Russia will demand France repay all damages, if the Mistral deal is broken off, Russian Deputy Defense Minister Yury Borisov told reporters on Thursday.

"Of course, Russia will defend its right to the end in accordance with the agreements concluded and will demand repayment of all damages we could sustain in the case that the Mistral contract is broken off," Borisov said in regard to the statement of French officials on the possible cancellation of Mistral helicopter-carrying vessel supplies to Russia as sanctions for Crimea's accession to Russia.

The contract, concluded between Rosoboronexport and French ship-builders, stipulates punitive sanctions for cancelling the deal, Borisov said.

"I think that it is too early to voice them. It has not come to this. I hope that France will weigh everything clearly, all pluses and minuses of this contract and makes a right decision," Borisov said.

If France breaks off the Mistral deal, this will affect its international reputation first of all, Borisov said.

"As you understand, the case is not even this agreement, the case is the reputation of the state, which at a certain time concluded this agreement. This is losing the country's reputation as a partner with the entire international community," he said.

Mistral manufacturers in France hint that anti-Russian sanctions undesirable

The western countries' sanctions against Russia that the EU and US officials are currently discussing as part of retaliation for Crimea' accession to Russia may threaten the interests of European business companies. Officials of the French companies DCNS and STX have already voiced concern about the likely collapse of the deal to deliver Mistral-class helicopter-carriers to the Russian Federation.

Paris may give up the contract for building Mistral-class amphibious assault ships for Russia as part of the western countries' economic sanctions against the Russian Federation, a move that may lay off 600 workers, engaged in the project. Le Figaro also reports that the collapse of the deal will also negatively affect the financial soundness of DCNS.

According to Le Figaro, Moscow has already paid 1.2 billion euros to Paris, or more than a half of the contract sum. If breach of contract is also included in the economic sanctions package against Russia, France will have to pay the break fee.

Sources close to ARMS-TASS claim that the penalty charge payments will make up the very same 1.2 billion euros. According to the Russian news agency, the sum comprises the cost of the contract for two ships and the punitive sanctions for the contractor's failure to perform their obligations.

Possible cancellation of Russian Mistral vessels deal to hit France back - source

France will lose more than it will gain, if Paris decides to cancel the deal on selling Russia two Mistral helicopter-carrying assault ships, a source close to the military and technical cooperation sector said.

"Russia has a considerable arsenal of strong response measures, to which it would not want to resort at all," the source said when commenting of the statement of French Foreign Minister Laurent Fabius on March 17 that the possibility of cancelling the Mistral deal was among the measures in the framework of the third wave of sanctions against Russia.

Firstly, "in case the deal is annulled, the French will not get a significant part of the total contract sum, which is estimated in over one billion euro" and which is paid after the contract is executed, the source said. Secondly, "France will have to return to Russia all advance payments on this contract" and, third, "Russia reserves the right to file a lawsuit regarding France to the international arbitration court in Geneva for not implementing contract obligations," the source said.

"The lawsuit could amount to several billion euro," the source said. "It is unlikely that dock workers of the STX France company in Saint-Nazaire and unions will be thrilled with such response measures," the source said. "The company is in a quite difficult financial situation and is surviving, to a large extent, thanks to the Russian order," the source said.

French President Francois Hollande said on March 7 that France will continue implementing the contract on supplying the two Mistral vessels to Russia. France is complying with the conditions of the agreement signed, the parties are not at a stage of dissolving the contract and it is hoped that this will be avoid, Hollande said.

Voice of Russia, TASS, Newsru.com, Interfax

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