Source: Severance of contract for supply to Russia of 2 Mistrals will cost French budget less than 850 mln euros

The total amount of payments that Russia will receive from France for failure to supply the Mistral-class helicopter carriers will not exceed EUR850 million, a source with knowledge of the situation told Interfax-AVN on Aug.7.

The delivery of the first helicopter carrier, the Vladivostok, to the Russian Navy was due in the middle of November 2014. Source: Reuters

The total amount of payments that Russia will receive from France for failure to supply the Mistral-class helicopter carriers will not exceed 850 million euros, a source with knowledge of the situation told Interfax-AVN on Aug.7.

"Bearing in mind that Russia has paid France some EUR840 million of the 1.2 billion envisaged by the contract and France has assumed the obligation to pay for the dismantling of Russian equipment from the vessels, the total amount of funds that Russia will receive will not exceed 850 million euros," the source said.

The source said Russia had received from France 80 million euros for the afterbodies built for the vessels at the Baltiysky Zavod even before the severance of the contract. "Consequently, the amount of payments that France will make will be less than 800 million euros," the source said.

The Kremlin press service reported earlier that "during their consultations held in a friendly atmosphere, as is traditional in the Russian-French relationship, experts came to a mutually acceptable agreement on the reimbursement of the funds paid by Russia under the contract and the return of the shipped Russian equipment and material."

"France has already transferred the said funds and after the return of the equipment will acquire the right of ownership and be able to dispose of both ships. Moscow considers the Mistral issue fully settled," the Kremlin said.

Russia will receive the sum, which corresponds with its expenses, French Defense Minister Jean-Yves Le Drian said in an interview with the RTL radio station on Aug. 6.

Rosoboronexport and France's DCNS signed a contract to build two Mistral-class helicopter carriers in June 2011. The St. Petersburg-based Baltiysky Zavod, part of the United Shipbuilding Corporation, built the sterns. The STX France Saint Nazaire shipyard attached the sterns to the bows and put the finishing touches to the ships.

The delivery of the first helicopter carrier, the Vladivostok, to the Russian Navy was due in the middle of November 2014, but the French administration refused to honor its contractual commitments under pressure from NATO allies, primarily the United States, using the escalating tensions in eastern Ukraine as an excuse. The second carrier, the Sevastopol, was supposed to be transferred to Russia in fall 2015.

Western sanctions imposed on Russia imply that military-technological contracts signed in the previous period must be fulfilled.

Source: France transfers to Russia 80 mln euros paid for building of stern parts of 2 Mistrals before agreement broken off>>>

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