French President Francois Hollande counts cost of warship deal with Russia

 

French President Francois Hollande in the lobby of the Elysee Palace. Photo / AP

President Francois Hollande has resolved a spat with Russia over the future of two advanced warships Moscow ordered from France before its annexation of Crimea poisoned relations with the West.
After seven months of negotiations, France and Russia agreed on compensation for Hollande's refusal to hand over the ships, according to announcements in Paris and Moscow on Thursday.
Russia will be "fully reimbursed for the sums it has advanced" and France will have "complete ownership and free disposal" of the two ships, according to an Elysee Palace statement issued after a phone talk between Hollande and Russian President Vladimir Putin.
The Kremlin, meanwhile, said Putin and Hollande "took a joint decision to annul the contract". France has already returned money Russia had paid, and "Moscow considers the Mistral issue to be completely settled", the Russian statement added.

The agreement ends a toxic affair bequeathed to Hollande by his predecessor, Nicolas Sarkozy.
In December 2010, Sarkozy concluded an accord worth €1.2 billion ($2 billion) to build two Mistral-class helicopter carriers in France, and another two which would be built in the Russian city of St Petersburg using French help.
The two ships are sophisticated pieces of military kit, able to project amphibious ability almost anywhere in the world.
Nearly 200m long and displacing 21,000 tonnes, they can steam for almost 11,000km at 19 knots, carry 16 heavy-combat or 32 light helicopters, four landing barges and 70 vehicles, including 13 heavy tanks.
They can be used by vertical-takeoff-and-landing fixed-wing aircraft, have quarters for up to 500 troops, a 69-bed hospital and a 950sq m command centre for managing land, sea and air operations simultaneously.
Sarkozy, in typically flamboyant fashion, declared the agreement -- the first time a Nato member had sold sensitive military hardware to Russia -- to be a coup for bilateral ties and the French economy. He turned a deaf ear to protests from the Baltic states and Georgia, on Russia's front line, that it was a deal with the devil.
Their concerns proved horribly justified last year when Putin seized the Crimean peninsula and allegedly stoked armed revolt by ethnic Russians in eastern Ukraine.
With the deadline looming for France to hand over the Vladivostok, the first of the ships, Hollande yielded to Nato pressure to suspend the agreement indefinitely. The second ship, also being built at the DCNS shipyards in the Atlantic port of St Nazaire, had been scheduled to be handed over later this year. In a stroke of irony, it is called the Sebastopol -- the main city of the now-annexed Crimea.
The financial details of the Hollande-Putin agreement remain sketchy.
The reference to reimbursement clearly applies to the €785 million down payment. Less sure, though, is whether France has promised, now or in the future, to meet other costs accruing from the cancellation. These included the cost of training 400 Russian sailors; carrying out infrastructure work in the port of Vladivostok, where the first ship was to have been based; and stripping the ships of Russian-made telecommunications gear, which will now be sent back to Russia.
Last week, Vladimir Kozhin, in charge of military technical co-operation at the Kremlin, said France would stump up more than €1.1 billion in compensation, although this report was denied in Paris.
Another area of uncertainty is what will happen to the Mistrals themselves. The French Navy already has three ships in this class and has no need for more. There is apparently nothing in the cancellation agreement to prevent their transfer, although purchasers may be deterred by a high price and their technical specifications, some of which are tailored to the Russian Navy. Canada and Brazil have been mentioned as having a possible interest.
For Hollande, the Mistrals have been not only a political headache but an economic one, too. Compensation is only part of the bill -- there are also the costs of maintaining the ships at St Nazaire, estimated by the DCNS at between a million and "several million" euros a month, and of supporting the shipyards for loss of work.
Russia's supporters in France had mounted a last-ditch lobbying effort, warning Hollande cancellation would hit the hard-pressed taxpayer and damage the country's reputation for reliability in the armaments market.
"To not hand over the Mistral would be a commercial aberration," a group calling itself Les Francais Libres (The Free French), which includes 10 MPs, said in an opinion piece in the right-wing Le Figaro on Monday.
It also argued that the deal was a hallmark of "Franco-Russian friendship" and preserving it would help consolidate "peace in Europe".