France has to make a crucial decision which will have far-reaching consequences. Whether to deliver two Mistral ships to Russia (which were originally earmarked for the Russian Navy) and face the anger of its NATO allies OR to terminate the Mistral deal, paying a heavy price and further deteriorating its economy.
Currently, the biggest problem that France faces is in the form of European dimension - that is the embargo to Russia. France has received an order for two Mistral class amphibious assault ships; it was paid for the first, which now is ready for delivery and already received $1.3 billion. The second warship in under construction while there has been discussions for the possible order of a third one.
By the embargo rules, France is prohibited to deliver war ships to Russia, which means that it has to return the money already received plus penalties and interests. There are, of course, customers including Paris’ NATO and European Union partners, as well as the likes of Canada and Japan. But by cancelling order France, one of the biggest arms merchants worldwide, will lose its international reputation as a reliable supplier.
That's why the French President François Hollande on Monday called for sanctions on Russia to be lifted, a move considered to be connected with mending relations with Russia due to the unsettled dispute over the delivery of two Mistral ships for the Russian navy. Amid tough Western sanctions on Russia, the French President's soft tone suggests he will look to resolve the Mistral dispute, a move that could be costly for France.
The 1.12 billion euro contract for building two Mistral-type ships was signed by the Russian defense exporting company Rosoboronexport and DCNS, a French industrial group specializing in naval defense and energy, in June 2014. The 21,300-ton Mistral-class ship can carry up to 16 helicopters, four landing crafts, 13 tanks and over 400 soldiers.
France’s continued refusal to cancel the contract reveals its struggle to complete it without offending its allies. Yet France’s true warship problem is offsetting costs, not completion of the contract. It cannot supply the Russian military
while simultaneously denouncing its actions. If US and its allies do not take a much more serious and active role in finding alternative destinations for the Mistrals, France would
be heading for trouble.