France will pay Russia $1.27 billion compensation for the non-delivery of two ordered mistral helicopter landing ships, according to a report by the liberal Russian newspaper Kommersant. The deal, which was originally worth $1.2 billion and supposed to be completed in the autumn, was held up after Russia annexed Crimea from Ukraine in March last year.
The compensation covers advance payment and additional costs taken on by the Kremlin, such as crew training, building infrastructure and developing prototypes of helicopters that would fly from the ships. Stern sections that were built in Russia will not be dismantled, according to Kommersant sources. Russia is expected to return operational certificates upon the payment of the refund at which point France can sell to a third party military.
Canada was rumored to be one potential buyer after French President Francois Hollande visited the country last November. The European Union was also touted as a potential buyer, but EU officials said they do not have the relevant facilities to host such ships.
— Sputnik (@SputnikInt) July 31, 2015
Talking about the compensation deal on Thursday, Vladimir Kozhin, President Vladimir Putin’s aide on military-technical cooperation, said that “talks have been completed” and “the schedule and amount which Paris will pay to Moscow” was decided, but refused to divulge the amount.
Under pressure from European leaders earlier this year, Hollande said that the deal would not go ahead until Russia met the terms of February’s Minsk II agreement that called for an end to hostilities in the east Ukraine war. When those terms were not met, both France and Russia declared that the contract had been terminated.
International contract lawyers told International Business Times last year that a clause commonly found in such deals could have netted Russia upwards of $3.8 billion. After the deal was formally cancelled earlier this month, Russia announced that it would begin building its own helicopter landing ships of the same specifications.