Russia Wins Out on Mistral Deal

Mistral warship

By The Maritime Executive 2015-09-18 19:05:37

Russia has received double the value of the original Mistral warship deal with France due to the sharp devaluation of the Russian currency, Russia’s Minister of Trade and Industry Denis Manturov said on Friday.

The 2011 contract on the delivery of two Mistral-class helicopter carriers was officially terminated in August over Russia's alleged participation in the Ukraine conflict, with France paying Russia around $1 billion in compensation.

Russia and France signed a 1.2 billion euro ($1.35 billion) agreement in 2011. The contract was signed by the Russian company Rosoboronexport and French naval defense company DCNS/STX. The first vessel, Vladivostok, was to be delivered in November 2014.

In July, Russia indicated that it wanted 1.163 billion euros ($1.32 billion) from France in compensation. While Russia had not paid all of the contract's value, it had incurred additional expenses on personnel training, organizing production of parts for the vessel in Russia among other outgoings.

France is confident it will wrap up the sale of two Mistral warships to a new buyer in the next few weeks, Defence Minister Jean-Yves Le Drian told the newspaper Le Monde.

"Several countries have lined up to buy the two boats," Le Drian said in an interview published on Friday. "I am rather optimistic about the fact we'll find a buyer in the coming weeks."

Sources close to the matter said last month that France was in talks to sell the two helicopter carriers to Egypt after the sale to Russia was cancelled. Egypt, Canada, India and Singapore have all emerged as potential buyers.

Cairo has sought to boost its military power in the face of a two-year-old insurgency based in the Sinai peninsula and a conflict in neighboring Libya that could spill over into Egypt.

Such a sale would also fit France's recent strategy of favoring predominantly Sunni Arab nations, both politically and commercially, over their Shi'ite rival Iran.