Negotiations between Russia and France on the purchase of Mistral helicopter carriers are at an impasse. The parties cannot agree on the cost of the ships - from the initial £ 980 million it can grow to £ 1.24 billion. Now the deal from the level of executors represented by Rosoboronexport and French DCNS can return to the level of the top officials of the two countries, which actually means the beginning of negotiations from scratch, the Kommersant newspaper reported on Thursday.
A delegation of Rosoboronexport, FS MTC, the Ministry of Industry and Trade and the United Shipbuilding Corporation (USC) held talks in Paris with the French Defense Ministry and DCNS about the purchase of two Mistral helicopter carriers by Russia, several sources close to the talks told Kommersant. Upon returning to Moscow, the members of the delegation "informed the top officials" that the negotiations had reached an impasse - the parties "had a number of fundamental disagreements, primarily over the price of the ships they were buying." Russia is ready to buy both Mistrals for no more than £ 980 million, but France insists on a contract price of at least £ 1.15 billion. Rosoboronexport, FS VTS, Ministry of Industry and Trade and USC declined to comment.
The final commercial offer of the French side for Mistral Russia should receive on March 15, Kommersant sources say. However, price negotiation may require "separate negotiations on the value of the contract with French President Nicolas Sarkozy." Who exactly will lead them - President Dmitry Medvedev or Prime Minister Vladimir Putin, sources do not tell Kommersant, and the Prime Minister's press secretary Dmitry Peskov told Kommersant yesterday that he knew nothing about the disagreements under the Mistral contract. The telephone of the president's press secretary, Natalya Timakova, did not answer.
According to Kommersant's sources, the reason for the disagreement over Mistral's price is the "unprofessional approach to the contract on the part of the Ministry of Defense." The fact is that during the negotiations the Russian delegation proposed to the French side to include in the Mistral price the price of licenses and technical documentation for the construction of individual units of these ships in Russia. It is assumed that the subcontractor of the contract in Russia will be the Admiralty Shipyards, which are part of the USC, which must complete 20% of the work on the first ship, and 40% on the second.
However, the French side did not agree to include licenses and technical documentation in the cost of the project, and, says one of Kommersant's sources, "they have certain legal grounds for this." In December 2010, Vice-Admiral Nikolai Borisov, Deputy Commander-in-Chief of the Navy, signed a protocol with France, which stated the cost of the contract at the level of? 1, 15 billion. It consists of the price of two ships (? 980 million), as well as some logistics costs (? 131 million) and crew training (? 39 million). "Such initiative caused indignation in the government, since Mr. Borisov did not have any authority to sign the protocol," says a Kommersant source close to the FS MTC. "This scandal," he said, "is fraught not only with complications of negotiations on the Mistral", but also "may darken relations with the French side at the interstate level." The Defense Ministry declined to give official comments.
Nikolai Borisov signed the protocol without the consent of Rosoboronexport and the FS MTC, and when the French Ministry of Defense and DCNS presented it to the Russian delegation, "it came as a complete surprise to her," Kommersant sources say. France estimates the cost of licenses and technical documentation for two ships, which are also not included in the contract price, at £ 90 million. France is ready to give technical documentation for free (estimated at £ 40 million) if Russia takes firm commitments to purchase two more Mistrals.
There are other disagreements between the parties, Kommersant sources say. For example, the Ministry of Defense is still making changes to the terms of reference for the first two ships, and this gives the French side additional arguments for increasing the contract price. In addition, Russia and France cannot decide where the joint venture that will build Mistral will be registered - at a Russian or French shipyard, and this also requires discussion "at a higher level."
The deputy head of the AST center, Konstantin Makienko, is not surprised by the disagreements over the contract for Mistral and notes that "this is a deal in which everything can change and be played back even after the contract is signed." However, if the deal again reaches the level of the leadership of the two countries, the expert says, then the parties will certainly reach a compromise on the price. But in any case, adds Mikhail Pak from the Aton investment company, it will not be easy to deploy a deal that is “so much touted”.
