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Interest Rises in EU Acquisition of Mistrals Sold to Russia

Aug. 2, 2014 - 03:38PM   |  
By PIERRE TRAN   |   Comments
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Controversial Ship: The Vladivostok, a Mistral-class ship ordered by Russia, is seen in Saint-Nazaire, western France. (JEAN-SEBASTIEN EVRARD/ / AFP)
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PARIS — The idea that the European Union — not Russia — would acquire two French Mistral-class helicopter carriers already sold to Moscow is gaining ground as the West adopted a ban against future arms deals to Russia, and the energy and financial sectors, analysts said.

On Tuesday , the EU adopted a tier 3 batch of sanctions — for the first time aimed at whole sectors rather than selected asset freezes — while excluding the controversial €1.2 billion (US $1.6 billion) contract for the Mistral warships.

Dual-use, civil-military equipment was included in the punitive measures, which are seen as pushing the Russian economy closer to recession and as a hit to fragile economies in Western Europe.

Paris has been quietly looking for an acceptable solution, with the EU seen as a possible exit from the contentious arms contract with Russia.

“If the two ships are handed over, it is as if nothing had happened,” said Edouard Tétreau, head of the Paris office of think tank European Council on Foreign Relations, referring to the shootdown of the Malaysian airliner and the loss of 298 lives.

German officials wonder how the Mistral problem can be resolved, a second analyst said.

Meanwhile, in eastern Ukraine, civil inspectors last week finally gained access to the wreckage of the Malaysian Airlines plane to retrieve bodies and determine what brought down the flight, after fierce combat between government troops and separatist fighters had prevented them from reaching the site.

Despite the highly public criticism of France, the EU has accepted that the Mistral deal would go forward.

The latest anti-Russia measures are seen as a sharing of the economic burden among the 28 EU states and an acceptance of the Mistral deal, a British official said.

“Sanctions are difficult for all member states of the European Union,” the official said. “It was very important to show the burden was being shared.

“All of us in imposing sanctions, of course, have to take some pain, but the actual decision on any particular issue is for the French government,” the official said.

The EU moves are intended to put pressure on Russian President Vladimir Putin “to pull his troops away from the border and to really understand that what he’s been doing is unacceptable as part of the community of civilized nations,” the official said.

One possibility is the EU taking up the Mistral contract.

“It is being discussed in Paris as an option,” Tétreau said. “It is gaining traction in Paris. There are diplomats and politicians in Paris who see that as a possibility.”

The EU has ample financial means, with the official seven-year budget set at €1 trillion, he said. One of the ships could be based at the docks shared by Belgium and the Netherlands, and the second vessel in the Mediterranean, he said.

An alternative would be NATO, which has the infrastructure and mandate, he said.

If the EU were to make the move, there is the European Defence Agency (EDA), which has the pooling-and-sharing approach for the member states. That could be a financial system for acquiring military platforms, he said.

The EDA is a European agency but one that Britain views with deep skepticism as London sees NATO as the main military international organization and resists what it sees as a duplication pushed by Paris.

Jean-Pierre Maulny, deputy director of think tank Institut des Relations Internationales et Stratégiques, said, “It’s a good idea but it would stand more chance of success if it were part of a global package.

“If Germany supports the idea, that’s helpful,” he said.

The EU acquisition idea was floated in a piece published in May by senior researchers Claudia Major and Christian Molling from the German Institute for International and Security Affairs.

“Europe also offers the opportunity to solve the French dilemma by buying up the Mistral ships and using them for itself,” Major and Molling wrote. The German Navy has called for such a capability, but such an acquisition is beyond the financial reach of a single nation, the paper said.

Pascale Joannin, managing director of Fondation Robert Schuman, a think thank, said there has been debate following President François Hollande’s remarks that delivery of the Sevastapol, the second ship, would depend on Russia’s “attitudes.” The first ship is named Vladivostok.

“There is debate on the options on the table,” she said. “Where could the Sevastapol go?” she said.

There are two possibilities: The EU could acquire them, but the 28-nation community lacks the structure to manage the ships; or the French Navy could take over the ship and make it available for the EU, she said.

What to do with the Sevastapol has exercised minds in Paris.

Jean-Paul Perruche, chairman of EuroDefense-France, a specialist think tank whose members include retired senior officers, officials and procurement chiefs, said, “It has been under discussion for the last three months under confidentiality.”

The French position was for a ban on new arms deals but not on current contracts, a Defense Ministry spokesman said. Certain countries have called for the ban to apply to weapon contracts already signed, he said.

The French government has not looked for alternatives to delivering the ships. “France has never worked on this hypothesis,” the spokesman said.

“France is in an uncomfortable position,” said Loic Tribot La Spiere, chief executive of think tank Centre d’Etude et Prospective Stratégique.

The EU has adopted far-reaching economic measures against Moscow, but France is selling sophisticated warships, even if they are not delivered with weapons, he said.

Hollande said on July 21 it is up to the European Council to decide the sanctions and then they would be against future arms deals, not the present Mistral contract.

But if the council insisted on a retroactive measure, that would allow Hollande to say the move was set by the highest EU policy level and let Paris off the hook, Tribot La Spiere said.

An EU acquisition may be a good idea, but it would be complicated to implement: Who would crew the vessels, and some countries might object to paying France for the ships, he said.

Maulny agreed. “It risks being seen as too opportunistic for France,” he said.

Perruche, a former French Army general who served in the French mission at NATO, said the economic sanctions are essentially a political message, but their credibility relies on nations taking concrete actions.

Since those actions will generate economic damage, the consequences should be equally shared, he said. One of the ideas previously raised has been creation of a European assistance fund to help cut economic reliance on Russia, he said.

“A separation between political and business interest calls for a political leadership of Europe, whatever form it may have,” he said.

A senior French defense analyst has previously said the Mistral deal was essentially a “political problem” rather than industrial, as the contract was not vital to the domestic defense sector.

Jose Manuel Barroso, the President of the European Commission, and European Council President Herman Van Rompuy, said the sanctions were a “strong warning” to Moscow.

Besides Washington and London, leaders in Lithuania and Poland, and the Swedish foreign minister have called on France to back off from the Mistral deal. Japanese Defense Minister Itsunori Onodera told his French counterpart, Jean-Yves Le Drian, on a visit to Tokyo last week, there was “strong concern” about the sale to Moscow, Reuters reported. That was a polite way of saying “stop the deal,” said Onodera, the news report said.

Poland is looking to spend billions of dollars for submarines, multirole and combat helicopters, and surface-to-air missiles and French industry hopes to win business.

State-owned DCNS is the prime contractor for the Mistral, which is built with the Russian partner OSK in Saint Petersburg.

On the possible impact on French arms exports, DCNS Chief Executive Hervé Guillou said, “I have complete confidence in the government’s explaining to the various potential partners the why or why not the ships were delivered,” Agence France-Presse reported.

Safran played down the impact of the sanctions.

“Our defense activities are 10 percent of the group total, and Russia is not by any means the largest customer, so you are talking about something barely material at the Safran level,” said Chairman Jean-Paul Herteman, Reuters reported.

In July 2012, Safran’s Sagem defense unit signed cooperation agreements with Russian industry, including supply of opto-electronics and inertial navigation systems for tanks to local partner NKP Ouralvagonzavod, newsletter TTU reported.

The Group of Seven nations — the US, Canada, France, Germany, Italy, Japan and Britain — indicated a willingness to extend sanctions if Russia failed to respect Ukraine’s sovereignty.

“Russia still has the opportunity to choose the path of de-escalation,” the G7 said on July 29. “If it does not do so, however, we remain ready to further intensify the costs of its adverse actions.”

Moscow responded the next day by banning most imports of fruits and vegetables from Poland, and said that could be applied to the whole EU. The EU will review the ban after three months. ■

Julian Hale in Brussels contributed to this report.

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