France and Russia Close Book on Mistral Warship Deal Gone Bad

The Mistral-class helicopter carrier Vladivostok is seen at the STX Les Chantiers de l’Atlantique shipyard site in Saint-Nazaire, western France, November 25, 2014. REUTERS/Stephane Mahe

 

By Gregory Viscusi

(Bloomberg) — France and Russia have agreed to terminate a contract for two helicopter carriers that France built and then refused to hand over because of the conflict in Ukraine.

France has reimbursed the money Russia advanced for the Mistral-class warships and will return Russian equipment that had been installed, leaving France free to use or sell the vessels as it sees fit, according to a joint statement from both countries on Wednesday.

“This matter is now closed,” they said in the joint statement.

See Also: France the Clear Loser in Failed Warship Deal

No money amounts were revealed, and the price of the ships has never been officially announced. French newspapers such as Le Monde have reported it was a 1.2 billion-euro ($1.3 billion) contract.

The sale, signed by former President Nicolas Sarkozy in 2011 during a period of warming relations with Russia, became a policy dilemma for President Francois Hollande after France and its allies imposed sanctions on Russia in early 2014 for its actions in Ukraine.

Hollande initially announced France was simply delaying delivery of the first ship, due at the end of last year, later saying he was seeking to terminate the contract. The ships are sitting in a naval dockyard in Saint-Nazaire on France’s Atlantic coast.

Hollande and Russian President Vladimir Putin spoke by telephone on Wednesday to seal the agreement, the French leader’s office said. Putin said on April 16 that Russia wouldn’t demand payment of penalties for non-fulfillment of the contract.

The 199-meter (653-foot) warships are noted for their versatility, and can be quickly converted from helicopter carriers to hospital ships to control-and-command vessels. The ships built for Russia were named Vladivostok and Sevastopol.

About 400 Russian sailors trained on one of the ships late last year.

–With assistance from Olga Tanas and Scott Rose in Moscow.

©2015 Bloomberg News