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Russian Mistral Procurement Stalled

By on Monday, March 7th, 2011

The governments of Russia and France are reportedly in a deadlock over the price of the Mistral-class vessels. Russia is expected to procure two Mistral-class ships from France under a joint venture that will lead to an additional two vessels being constructed in Russia. While an agreement was reached in January 2010, final contracts detailing costs and deadlines have yet to be signed. Negotiations are now stalled over price.

Russia is only willing to pay EUR980 million for two Mistral-class ships, while France is insisting that it get at least EUR1.15 billion. According to Deputy Defense Minister Vladimir Popovkin, the contract for all four vessels should only total EUR1.5 billion.

The issue is complicated by the fact that deputy chief of the Russian Navy Vice Adm. Nikolai Borisov signed a protocol with France in December 2010 that set the price of the contract at EUR1.15 billion. However, Borisov was supposedly not authorized to sign the document, and did so without consulting with Rosoboronexport and the Federal Service for Military-Technical Cooperation. Regardless, France wants Russia to be held accountable.

The EUR1.15 billion price tag includes the construction of the first two ships (EUR980 million), some unidentified logistics expenses (EUR131 million), and crew training expenses (EUR39 million). However, Russia wants the price to also include the cost of construction licenses for the second pair and technical documentation costs. France insists that those items will cost an additional EUR90 million.

France is expected to issue a final proposal on March 15.

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