Sep. 6, 2014 - By PIERRE TRAN – Defense News
PARIS — France’s surprise suspension of the sale of a Mistral-class helicopter carrier to Russia is seen as a delaying yet diplomatic move to buy time on a troubled arms deal and ease pressure on French President François Hollande with other leaders.
The delicate French repositioning — which is not a cancellation — took place as Ukrainian forces fought with rebels to regain control of Donetsk and Mariupol, eastern Ukraine, and Russian President Vladimir Putin pitched a cease-fire plan to Kiev.
Hollande’s “on hold” decision came on the eve of the two-day NATO summit, where US President Barack Obama and some 60 heads of state and government met at the Celtic Manor resort in Newport, Wales, on Sept. 4.
A delivery of the first Mistral ship, which bears its name Vladivostok in Cyrillic script on the hull, was due for delivery by the end of October. Now that the deal is on hold, France will reap the financial, economic and reputational consequences.
The Elysée president’s office declined comment.
Russian sailors are due to go to sea for training on the Vladivostok this month, while work continues on the second ship, an industry source said. Sevastapol is scheduled for handover at the end of 2015.
Prime contractor DCNS declined comment. Subcontractor STX France is building the Sevastapol at the Saint Nazaire dockyard in western France.
A cancellation would likely bring a wave of Russian litigation for repayment of funds and damage the prospects of future deals.
“This is a wise decision,” said François Lureau of consultancy EuroFLconsult and former procurement chief. “This is a decision which buys time, time to analyze the situation and to avoid the irreversible decision of cancellation.”
French media reported widely that Hollande was giving ground after pressure from Washington and London, but the Baltics — Estonia, Latvia and Lithuania — and Nordic states also have voiced grave concern over the two-ship, €1.2 billion (US $1.6 billion) Mistral deal with Russia.
French prospects in the world arms market could take a hit, particularly in the exclusive talks on the sale of Dassault Aviation’s Rafale fighter to India, a conservative politician said. India and Russia have close defense ties.
“This puts on a fragile footing arms contracts under negotiation … particularly the recent contract with Saudi Arabia for equipping the Lebanese armed forces and the prospective contract for 126 Rafales for India,” said Philippe Folliot, a member of Union des Démocrates et Independents who sits on the parliamentary defense committee.
In New Delhi, Defence Ministry officials said there was no linkage between the Mistral warship deal with Russia and negotiations for the Rafale with India.
A British official said the warship debate is not seen as a problem for the Rafale sale to the Indian Air Force. “India is not invading a neighboring country,” the official said.
The French decision is “a reasonable compromise,” a defense specialist said. “In international relations it’s very important to keeps the door open.”
Hollande faces domestic difficulties with a fractious Socialist Party and a weak economy, and sought to avoid difficulties with international colleagues.
“At the summit, he didn’t want to meet Obama with such a question still pending,” the source said. The administration hardens the line but also wins time to look for solutions.
“Chapeau [tip of the hat],” the British official said of the suspension order. “The pain is shared,” he said, referring to recent sanctions aimed at Russian finances that hurt London, a key market for global funds.
Hollande gave “a very significant speech” on Aug. 30 to socialists and social democrats, pointing to Russia’s incursion and a need to increase sanctions, the official said.
French officials will be explaining to export clients and prospects the difficulties on the Moscow-Mistral deal, seeking to reassure foreign governments, sources said.
The “on hold” decision does carry a big financial impact for France, but buys some time, said Jean-Pierre Maulny, deputy director of think tank Institut des Relations Internationales et Stratégiques.
France froze arms deals when Iraq invaded Kuwait in 1990 and suspended weapon systems intended for Libya when the West turned against Moammar Gadhafi. In the anti-apartheid South Africa era, Paris refused to approve a sale of submarines to Pretoria, Maulny said. French-designed helicopters, however, made their way to South Africa.
The geopolitics must be resolved as Russia seeks a zone of influence, he said. If Kiev and Moscow do not reach agreement on a deal, the peace plan will fall through and there will be a return to the Cold War, he said.
Hollande’s insistence on Russia was also important for French chances in Poland’s arms procurement plans, said Loic Tribot La Spiere, chief executive of think tank Centre d’Etude et Prospective Stratégique, pointing to MBDA, DCNS and Thales. There could also be interest for Dassault Aviation in Ukraine’s effort to modernize its Air Force, he said.
The French companies were at Poland’s MSPO arms show, which ran Sept. 1 to 4.
A defense expert said it may have been necessary to win time for a decision on the Mistral, but what is the fallback position if there is no agreement with Moscow? What does France win from its allies in return for the move?
Germany has already taken a stance on arms deals. Berlin has suspended a contract for Rheinmetall to build a Russian combat training facility, worth around €120 million, aimed at training 30,000 troops a year, reported broadcaster Deutsche Welle.
For German Member of European Parliament Manfred Weber, chairman of the conservative European People’s Party, there is no doubt: Paris has to cancel the Mistral deal, as the “hypocrisy” had gone far enough, he said in a statement on Sept. 2.
The next day, Hollande’s office issued the suspension statement.
“The recent actions by Russia in eastern Ukraine are contrary to the basic notions of security in Europe,” the Elysée said in a statement following a restricted defense council meeting on Sept. 3.
“President Hollande noted that, despite the possibility of a cease-fire, which is yet to be confirmed and implemented, the conditions that will allow France to authorize the delivery of the first amphibious landing ship [bâtiment de projection et commandement – command and projection ship] have so far not been met,” the statement said. ■
Vivek Raghuvanshi in New Delhi contributed to this report.
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