France-Russia Mistral Warships Deal: Settlement Negotiations Underway But Amount, Timing Of Compensation Are Issues

French and Russian officials were in the midst of negotiations Monday to reach a financial settlement for last year’s canceled sale of two Mistral-class helicopter carriers, according to a report. France opted not to complete a deal to send the fully constructed warships to Russia due to concerns about purported activity in eastern Ukraine in a conflict that has killed more than 6,000 people since it began in 2014.

“The president of France has said the conditions for the delivery of Mistrals cannot be fulfilled. But he has confirmed that we have started negotiations with the Russian side to get out of this problematic situation. There is agreement between [Russian President Vladimir] Putin and [French President] François] Hollande for resolving this problem and this is what we are doing,” said Jean-Maurice Ripert, the French ambassador to Moscow, according to Russian news agency TASS.

Disagreements over both the amount and the timing of compensation remain the chief source of contention between Paris and Moscow. French government officials have reportedly proposed a deal in which Russia would receive the entirety of its initial 785 million euro ($898.3 million) expenditure if it gave France written permission to sell the already-constructed Mistrals to another party.

But the Kremlin balked at that proposal, according to Russian newspaper Kommersant. Russian officials want additional compensation due to losses incurred because of France’s cancellation of the Mistral deal, as well as delivery of the money before Moscow gives France its permission to sell the ships elsewhere.

France agreed in 2011 to construct and sell the Mistrals to Russia in exchange for approximately $1.7 billion. The first Mistral was slated for delivery to Russia by the end of 2014, with delivery of the second ship scheduled for the end of 2015. But concerns about Russia’s annexation of Crimea in March 2014 and evidence that Russia’s military provided direct support to pro-Moscow separatist rebels in their fight against the Ukrainian government led France to renege on the deal.

French officials have yet to determine what they will do with the Mistrals. France could scuttle the ships or sell them to a third-party nation such as Brazil, China or Canada, according to reports.

The two nations’ disagreement over the deal has received international attention, but top Russian officials say any political unrest the cancellation may have caused has been put to rest. “The foreign policy aspects of the Mistral issue, including the reliability of partners, have long been cleared up,” Russian Foreign Minister Sergey Lavrov told TASS last week.