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Kremlin Aide Says Refund Deal Reached For Undelivered Mistral Warships

The delivery of the two Mistral warships was put on hold by Paris in September 2014 in response to Russia’s illegal annexation of Crimea and its support for pro-Russian separatists in eastern Ukraine. (file photo)

A top Kremlin aide says Russia and France have reached an agreement on reimbursement for two Mistral warships that Russia purchased for $1.3 billion but whose delivery is on hold to protest Moscow's actions in Ukraine.

Vladimir Kozhin, President Vladimir Putin's adviser for military and technical cooperation, confirmed on July 31 that a refund deal was reached. However, he did not reveal the figure, saying only that the amount will be announced when the contract is cancelled.

"The negotiations are completely finished, everything has already been decided, both the time frame and the amount," Kozhin told state news agency RIA Novosti.

There was no immediate response from Paris.

Russia's Kommersant newspaper reported earlier this week that France had offered to terminate the contract and pay back about $794 million provided France can re-export the warships.

French President Fancois Hollande said on July 27 that he would decide "in the coming weeks" whether or not to scrap the contract to supply the two Mistral-class amphibious assault ships to Russia.

Russia's state-owned TASS news agency reports that Russian technical specialists will visit the French port of Nantes-St. Nazaire to remove Russian military equipment from the helicopter-carrying ships. The news agency said the equipment was mainly communications equipment that would have been used for directing helicopter operations.

The delivery of the two warships was put on hold by Paris in September 2014 in response to Russia’s illegal annexation of Crimea and its support for pro-Russian separatists in eastern Ukraine.

The contract, which was signed in 2011 was meant to be the biggest arms sale ever to Russia by a NATO country, with the first of the ships had been due to be delivered to Moscow in 2014, the second in 2015.

Extra Expenses

However, Moscow announced in May that it had decided not to take the ships in response to France's putting the deal on hold. TASS quoted Oleg Bochkaryov, the deputy head of the Military-Industrial Commission, as saying on May 26 "Russia won't take them, that's an accomplished fact."

"Now there is only one discussion -- about the sum of money that should be returned to Russia."

Bochkaryov added that Russia planned to construct its own similar vessels but not copy the Mistral, adding that Moscow had a "slightly different ideology for the endeavor of amphibious assault."

In April, Putin insisted that the French side reimburse Moscow "all expenses" if the contract were to be terminated. He said that included not just the purchase price also expenses for training, the building of a new dock for the ships, and even transportation and housing of the crew.

He also downplayed the importance of the warships, saying that Russia had ordered them mostly to help the French shipyard which produces them.

However, the loss may be felt keenly by the Russian navy because the original deal not only was to provide two Mistral ships built in France but also gave Moscow the option to build two more Mistral carriers in Russian naval shipyards. In this way the deal could have helped to modernize Russia's own naval construction industry.

Paris had set as its conditions for delivering the ships a cease-fire and a political settlement in Ukraine. When Hollande announced delivery had been put on hold in September, he said the contract to supply the vessels was neither cancelled nor suspended but that the conditions for delivering the first ship, due to be handed over the following month, did not exist.

France had come under strong public pressure from its European partners and the United States to abandon the deal, which was signed under former President Nicolas Sarkozy in 2011.

With reporting by AP, AFP, Bloomberg, TASS, and RIA Novosti