Russia, France Agree Mistral Settlement, Reportedly €1.2 Bn

The severance of the contract for the two Mistral-class helicopter carriers between Russia and France may cost France almost €1.2 billion, Kommersant reported on July 31.

“France will repay Russia almost €1.2 billion,” the newspaper reported, citing sources in the sphere of military-technical cooperation.

The sources told the newspaper that final agreements on the severance of the contract had been reached during negotiations between Russian Deputy Prime Minister Dmitry Rogozin and Louis Gautier, the head of the French General Secretariat of Defense and National Security.

They entered an active phase in spring 2015 and ended last week, sources told Kommersant, adding that one of the most difficult issues was the amount that France should repay Russia.

Specifically, at the beginning of the negotiations France was ready to pay €784.6 million in compensation for “expenditures and losses” if documentary confirmation was received.

In the meantime, Russia assessed its losses at a higher amount: besides the net advance payment (€892.9 million) it also included the funding spent on training 400 sailors, building the infrastructure for the helicopter carriers’ base in Vladivostok and the work to create four experimental samples of the deck-based helicopters Ka-52K. The total estimation amounted to €1.163 billion, the publication says.

Sources have told Kommersant that this amount will definitely be repaid in full.

“The risks and expenditures associated with dismantling and unloading from the vessels the Russian equipment that was supplied to them during the construction will be added to it,” the sources said.

The sources also told the newspaper that the French will be assisted by a group of Russian experts, who will leave for the STX shipyard in Saint-Nazaire in the nearest future.

The newspaper specified that the equipment includes the control and communications system, not the garboards, which were manufactured at the Baltic plant, which, according to the newspaper, will stay on the helicopter carriers.

Kommersant reported that the end user certificates issued to the vessels, which are held by the Russian Defense Ministry, will be handed over to the French as soon as the money is repaid. After the money is transferred to the settlement accounts, Russia will give France official permission for the vessels’ re-export.

According to Kommersant, all these issues can be officially resolved in early August. After that, the leaders of the two countries are expected to make statements.

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