French Insist Mistral Talks with Russia on Track

France played down on Aug. 20 the prospects of losing an export contract for the Mistral warship following reports Russia is breaking off exclusive talks in favor of an international competition for assault helicopter ships.

"There is no reason to worry about developments," a French presidency official said. "Conversations are continuing in an excellent context."

The French government was responding to remarks made Aug. 19 by a spokesman for the Russian holding company, the United Shipbuilding Corp. (OSK).

"The Ministry of Defense will launch a tender offer. A commission is being created to organize the tender," said OSK spokesman Igor Ryabov, AFP reported.

In Moscow, the Kommersant newspaper said, "This means that the ministry has renounced the exclusive purchase of the French helicopter carrier the Mistral."

The proposed sale to Moscow of four French-designed command-and-projection ships of the Mistral type is reported to be worth 1.5 billion euros ($1.9 billion). The negotiations between Paris and Moscow have teetered on the military content delivered with the ships and the number of units to be built locally.

French officials have emphasized the Mistral is built to civil shipbuilding standards and would be supplied stripped of Western military equipment, whereas Russian interest has been to acquire defense technology.

French President Nicolas Sarkozy confidently predicted last month France would build the ships for the Russian armed forces, and has previously said French industry should construct two of the four that Moscow wants for modernizing its Navy.

A Russian contract win would be a windfall for DCNS, the majority state-owned military shipbuilder, which acted as prime contractor for the Mistral and its sister ship, Tonnerre. The two ships equip the French Navy. A third ship has been ordered under the Defense Ministry's reflation plan, intended to maintain jobs in the shipbuilding sector.

The proposed sale to Moscow, however, has stirred grave concern among Central European and Baltic states, following Russia's war with Georgia in 2008.