Mar 2, 2011

Russia and France in deadlock over Mistral cost

Russia and France have hit deadlock in talks over a deal for Moscow to buy Mistral helicopter carriers, with the two sides unable to agree on a price, a report said on Thursday, citing Russian sources.

Russia insists it will pay no more than $980 million (706 million euros) for two Mistral-class ships, while France insists on a contract worth at least $1.15 billion, the Kommersant business daily reported.

"The two sides have a number of issues where they disagree in principle, primarily on the price of the ships that are being bought," Kommersant cited a source involved in the long-running negotiations as saying.

The Russian leadership may have to hold fresh talks on the deal with French President Nicolas Sarkozy after talks in Paris last week ended in an impasse, sources said.

The Russian agencies that sent delegates to the talks, including the arms export monopoly, Rosoboronexpert, and the industry and trade ministry, declined to comment to Kommersant.

Russia and France signed a landmark agreement in January on equipping the navy with four of the helicopter carriers, two of which would be largely built in France and two of which would be built in Russia.

Russia's top general said last month that Moscow could deploy the ships, which can also carry tanks, in the disputed Kuril islands, which are claimed by Japan.

The deal to build the Mistral for Russia would secure jobs in the French shipyards, but France's NATO allies have expressed concern about arming Russia with modern Western weaponry.