Russian-French talks on Mistral have reached a deadlock – Kommersant

03.03.2011 Russian-French negotiations on procurement of Mistral class helicopter carriers have reached a deadlock, in particular, because of disagreement in price; contract cost may increase from EUR 980 mln to at least EUR 1.15 bln, reports Thursday's Kommersant.

"Russia is ready to pay for both Mistrals not more than EUR 980 mln, but France insists on the minimal price of EUR 1.15 bln", writes the newspaper. Meanwhile, neither Rosoboronexport nor Federal Service for Military Technical Cooperation (FSMTC) nor Ministry of Trade and Industry nor United Shipbuilding Corporation agreed to give any comments.

According to Kommersant, the reason for discords is "Russian defense ministry's amateurish approach to the contract". During negotiations Russian party offered to include the costs of license and technical documents for some parts to be constructed in Russia. (Supposedly, Admiralteyskie Verfi shipyard would be a subcontractor and perform 20% works on the first ship and 40% - on the second one). However, French party refused to include licenses and technical documents into the contract cost.

In Dec 2010 Russian Navy Deputy Commander-in-Chief Vice Admiral Nikolai Borisov signed a protocol with France specifying the contract cost as EUR 1.15 bln; it included prices for two ships (EUR 980 mln), some logistic expenditures (EUR 131 mln), and crew training (EUR 39 mln).

"Nikolai Borisov signed this protocol not coordinating with Rosoboronexport and FSMTC", writes Kommersant. "And when French defense ministry and DCNS presented the protocol to Russian delegation, it came as a surprise".

Thus, France evaluates cost of licenses and technical documents for two ships which are not included to the overall contract cost as EUR 90 mln. France is ready to afford technical documents for free (evaluated as EUR 40 mln), if Russia undertakes definite obligation to purchase two Mistrals more.

According to Kommersant, delegation of Rosoboronexport, FSMTC, Ministry of Trade and Industry, and United Shipbuilding Corporation spent the last week in Paris negotiating with French defense ministry and DCNS about Russia's procurement of two French helicopter carriers.

"Russia will receive France's definitive commercial offer on Mistrals on March 15", writes the newspaper referring to own sources. Note that reconciliation of the price could need "additional talks with French president Nicolas Sarkozy". However, it is still uncertain who will conduct negotiations – president Medvedev or premier Putin, writes Kommersant. Besides, Putin's press secretary Dmitry Peskov said to Kommersant he had heard nothing about discords on Mistral contract".

Procurement and construction of Mistrals will be held under State Arms Program 2011-2020.

Russia and France officially declared late in Dec 2010 that the consortium of United Shipbuilding Corporation (Russia) and DCNS (France) would build two Mistral class ships in Saint-Nazaire (France), and other two – under license in Russia. The tender was issued in Oct 2010 by Russian defense ministry.

Intergovernmental agreement on procurement of Mistrals was tied on Jan 25 in Saint-Nazaire. It stipulates neither terms nor cost of the future contract; they will be specified in another agreement which is to be signed by Rosoboronexport and DCNS in Apr 2011.

Assault landing ship Mistral has displacement of 21,000 tons; overall length is 210 meters; speed is over 18 knots; fuel range is up to 20,000 miles; crew is 160 plus 450 marines; air wing includes 16 helicopters, six of them can be simultaneously placed on the flight deck.