French-Russian Mistral trade saga terminated

Following a phone call on August 5, 2015, Russian President Vladimir Putin and his French counterpart François Hollande announced they’ve reached an agreement on the termination of the contract signed in 2011 about the purchase by Russia and the delivery by France of two Mistral amphibious assault ships – also known as helicopter carriers.

Once returned the Russian equipment and materials that had been supplied and the Russian side “exclusively and fully reimbursed” of sums advanced under the terms of the contract, France will obtain ownership of both ships and be able to use them. The two leaders didn’t specify the amount of the reimbursement which France has already transferred, the Kremlin said, and valued at $1,163 billion by Russian daily newspaper Kommersant. In November 2014, French President Hollande had decided to postpone the delivery because of the situation in east Ukraine and Russia’s involvement. Hollande’s decision was accompanied by diplomatic pressure from the United States and its Eastern Europe allies.

As the French-Russian joint communiqué was being sent to the press, one learnt in the meantime that NASA renewed a $490 million procurement contract with Roscosmos. If both France and Russia consider the Mistral issue to be fully resolved, the United States doesn’t seem as demanding with itself. Poorer of around €1 billion, France now owns two brand-new amphibious assault ships. The main concern now is to assess the long-term trade consequences of the Mistral saga for the French military industry.