Mistral deal

The real cost of France’s messy Mistral ship deal

The real cost of France's messy Mistral ship deal
The Mistral warships that could cost France €2 billion.
France faces a hefty bill for its cancelled deal to sell two Mistral warships to Russia that could be as much as double what the French government had initially suggested, according to reports on Wednesday.

The decision by France not to deliver two helicopter carriers ordered by Russia due to ongoing tensions in Ukraine looks like costing the country’s coffers far more than the government had initially led us to believe.

According to the Canard Enchainé newspaper the initial €1.2 billion that was set to take in looks like ending up being more like a €2 billion loss.

Ever since news broke last week that France and Russia had come to a deal over compensation for the cancelled sale, questions have been asked over how much France will have to shell out to keep Moscow happy.

Neither country mentioned the issue of any compensation payable to Russia and France's Defence Minister Le Drian insists that the true figure will be presented to the French parliament in September.

Paris insists it has paid back slightly less than €1 billion, which the Russians had already handed over, and assured the French public that “no penalties or supplementary payments for the rupture of the contract” would be paid.

But according to the Canard Enchainé France will have to dig a lot deeper into its pockets, including an extra €100 million to cover Russian costs of alterations made at Vladivostok port and adaptations to army helicopters.

On top of that,  the paper, which has a history of investigative reporting and has sources in the government, suggests another €200 million will be spent on “derussification” of the warships, or in other words removing any kind of trace that the vessels had initially been sold to Moscow.

Then there’s the €350 million costs claimed by the constructors DCNS and the €400 million worth of maintenance contracts for the two vessels that France could have counted on over the next 30 years.

That’s without taking into account other warships that France could have built for Russia that was an option in the initial contract.

Then there’s the €5 million a month security costs for guarding the ships at the western port of Saint-Nazaire.

So the eventual cost of the deal, initially signed by former President Nicolas Sarkozy, looks like costing upwards of €2billion.

None of these figures have been confirmed officially and the Ministry of Defence in France remains optimistic that costs will be reduced dramatically once they have sold on the vessels to another country.

And President François Hollande says they have plenty of takers.

The first Mistral had been due for delivery in 2014, while the second was to be delivered this year.

But as Russia and the West remained locked in their worst standoff since the Cold War over the Ukraine crisis, France's Western partners said any delivery of ships would undermine their efforts to isolate Moscow over its 2014 annexation of Crimea and support of separatists in eastern Ukraine.

In June last year, US President Barack Obama had urged Paris to “press the pause button” on its deal with Russia.

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