Russia Egypt $1B Mistral Deal: Warships' Helicopters, Equipment Agreed On After France Sale, Kremlin Says

Russia is expected to provide Egypt with more than $1 billion in equipment and helicopters for the two Mistral-class helicopter carriers Cairo bought from France last month, the Kremlin chief of staff said Monday, according to a report from Russian news site Sputnik. The two ships, currently known as the Sevastopol and the Vladivostok, were originally custom-built for Russia, but the final handover from France didn’t happen because of Moscow’s intervention in Ukraine that began in March 2014.

After the contract between Paris and Moscow was canceled this past summer, France was forced to repay Russia original costs, plus the investment the Russian navy spent on infrastructure and building specialized helicopters to go on the ships. The final bill for France came in at a little more than $2.6 billion, well above the $1.2 billion Russia originally paid for both.

The French deal with Egypt is a win-win for Russia as it means Moscow is able to sell the specialized equipment onboard the two ships and the helicopters to an ally. Had the ships gone to a NATO member or a country with close ties to the European Union, Russia would have removed the equipment to prevent it from getting into the hands of its rivals.

"Russia will be, if you want, a subcontractor, who will supply the missing equipment without which the Mistral warships are just a tin can. And of course, all the helicopters,” said Sergei Ivanov, the Kremlin’s chief of staff.

After months of searching for a new buyer, with NATO, the EU, Canada and Saudi Arabia all being touted as possible buyers, Egypt stepped forward. However, it’s not yet known how much Egypt will pay for the two ships, as they are not purpose-built and may be unfamiliar to Egyptian sailors. It’s highly likely France will incur a significant loss on both ships -- monetarily as well as to its shipbuilding reputation.

It’s also not known when Egypt will collect either ship as they will have to be refitted and Egyptian sailors will have to be trained to operate them.