The saga of the French Mistral-class helicopter carriers has started to sour Russian-French bilateral relations

The Mistral-class helicopter carrier Vladivostok is seen at the STX Les Chantiers de l'Atlantique shipyard site in Saint-Nazaire, western France, November 25, 2014. Photo: Reuters

One day, the “Mistral affair” will be confined to the history of international relations. But until then, the nearly six-month saga of the delivery of the mostly French-built Mistral-class amphibious assault ship Vladivostok could be a bugbear for all involved.

The ship, still awaiting delivery to Russia, has become the embodiment of the simple truth that politics is a fickle business. Whereas in 2010 the deal was a symbol of good neighborliness and trust between Russia and France, four years later, the story of the ship has turned into a major irritant in bilateral relations and a potential source of reputational damage for France, as well as a blow to Russia’s great power ambitions.

Recall that in 2011 Russia signed a $1.5 billion contract with the French shipyard DCNS for the delivery of two Mistral-class amphibious assault ships, the Vladivostok and the Sevastopol. The contract stipulated that the bulk of the vessels would be built by DCNS at the STX Europe shipyard in Saint-Nazaire (with the stern compartments made at the Baltisky-Zavod Sudostroyenie shipyard in St. Petersburg). The contract also provided for the construction of a further two ships in Russia at a later date.

Until recently, construction was more or less on schedule, and the lead ship, the Vladivostok, was due to arrive in Russia in October 2014 for completion at the Severnaya Verf shipyard. But the deal was stymied by events of a higher order, namely the West’s disapproval of Russia’s controversial policy towards Ukraine.

Although France resisted EU, U.S. and NATO pressure until the last moment, on the eve of the NATO summit in Britain, French President Francois Hollande is speculated to have finally yielded, stating that the conditions for the transfer of the first Mistral-class vessel to Russia were not in place, the conditions being an effective ceasefire in the east of Ukraine and observation of the Minsk agreements.

Yet despite the political saber rattling, the second ship, the Sevastopol, was quietly launched (actually dry-docked) on Nov. 20. In light of the uncertainty over its sister vessel, the delivery of the second Mistral, slated for November 1, 2015, is not even being discussed.

Implications of the Mistral precedent

Any further delay in the delivery of the lead ship to Russia might hurt France politically and economically. The most foreseeable implications are the economic losses involved. Despite Russia’s deteriorating situation since the summer, it has kept up regular payments for both vessels. By October, around $1.1 billion from a pot of $1.5 billion had been paid out, and Moscow was planning another $75 million payment in October.

According to Western media, Moscow may decide to take the matter to the Stockholm Arbitration Court, where the compensation payout could be at least $5 billion, covering the amount of the contract ($1.16 billion), penalties for delays ($1 million per week from the beginning of November), and indemnification for moral damage. Even if, theoretically, the principal amount is recoverable because the contract is insured, the additional demands could fall disproportionately on DCNS and, as a consequence, on the French government.

Finally, there remains the question of what to do with the two vessels. In view of France’s forthcoming military budget cuts, and the numerous other programs of greater importance, it is difficult to say if the ships will be purchased simply to support DCNS, or that a new customer will be found quickly. Not to mention the fact that they would then need to be adapted to different specifications and requirements.

Russian sailors stand in formation in front of the Mistral-class helicopter carrier Vladivostok at the STX Les Chantiers de l'Atlantique shipyard site in Saint-Nazaire, western France, November 25, 2014. Photo: Reuters

It also remains to be seen to what extent the Mistral case will damage France’s reputation as an arms seller. The global arms market has always viewed France as a “third” power, supplying weapons and military equipment to countries that, for whatever reason, could not buy them from the U.S. or Russia (and, before that, the Soviet Union). In many cases (for instance, India), French systems merely supplemented platforms of U.S. or Russian origin. France’s autonomy in international relations and permanent seat on the UN Security Council made it able to withstand pressure from stronger powers on the issue of arms supply.

The “Mistral precedent” seems to alter that perception. Before, France generally imposed bans on the supply of arms either on the basis of UN Security Council resolutions (as in the case of Iraq in 1990), or, in the case of five Israeli missile boats held back by France in 1969, unilaterally, regardless of the UN. This latest breach of contract due to political considerations (the result of the EU’s collective sanctions) could significantly weaken France’s standing in the arms market, especially in the eyes of those countries next in line for unilateral Western sanctions.

The stagnation of French arms exports and the ambiguous position of one of France’s largest arms contracts over the past few years could delay the signing of new contracts, particularly the finalization of the mega-deal with India for the purchase of 126 Rafale fighter aircraft, which is still on the table after three years of financial wrangling.

Each month of delay in signing a contract is making India’s procurement of a new batch of Russian Su-30MKI fighters to replace the aging fleet of MiG-21 (which was the original purpose of the Medium Multi-Role Combat Aircraft  (MMRCA) tender, which the Dassault Rafale eventually won) increasingly likely. Despite the significant number of buyers of French arms, the “shedding” of $1.5 billion from the books will amount to almost 20 percent of the industry’s annual earnings in recent years.

It can be stated in conclusion that the collective interest in “Euro-Atlantic solidarity” will cost France. The country is taking one for the team, so to speak. The attempt to save face in front of its allies and the need to fulfill contractual obligations (or at least avoid penalties) seem to be pushing France towards the risk of far greater losses in the medium and long term.

The opinion of the authors may not necessarily reflect the position of Russia Direct or its staff.

Editor’s note

According to French experts, France is delaying delivery of the Mistral-class helicopter carriers because it does not want to tarnish its reputation or relationships with countries in Eastern and Central Europe or the United States.

“The short-term gain from delivering the Mistrals to Russia could have serious ramifications not only in relations with the United States and countries of Eastern and Central Europe, but also in the arms market,” reads an editorial in Vedomosti.

However, according to Defense et Industries, DCNS is presently engaged in upgrading the Gdansk shipyard in Poland, building ships with German firms, and has multi-billion dollar contracts with Brazil. All of this is forcing France to defer delivery of the ships for as long as possible, since they could be used to deploy marines and helicopters, said Bruno Tertrais, an expert of the French Foundation for Strategic Research, in an interview with Le Point.

According to the Stockholm International Peace Research Institute (SIPRI), France has diversified its defense exports such that no exporter’s share exceeds 12-15 percent.

“In this situation, Paris can afford to choose the principle of inviolability of state borders and respect for national sovereignty, even to the detriment of its own finances,” according to Vedomosti.

“France has always favored sanctions, despite incurring material losses. So it was that in 1967 Charles de Gaulle banned the supply of missile boats and 50 Mirage aircraft to Israel. The Israeli Navy managed to take the cutters by stealth in 1969, but Tel Aviv never did receive the fighters.”