"Russia could accept India and Egypt receiving the equipment," with Cairo the prime candidate for buying the warships, the official said Sept. 7. Russian authorities "let it be known" in negotiations with French officials about the cancellation of the 2011 sale contract.
France promptly and fully repaid back Russia as there was concern the former shareholders of the Yukos oil firm could attempt to seize the warships as part of a US $50 billion claim against Russia, the official said.
Riyadh would finance Egypt's purchase of the Mistrals as Saudi Arabia lacks a maritime culture and the Egyptian Navy would serve as a "proxy" naval force for the Saudis, the official said. There is Saudi concern over a perceived threat in Yemen and from Iran, which drives Riyadh to fund a build-up of Egyptian capability.
Russia also wants to stay close to India, which has agreed to a co-production of the Russian Ka-226 helicopter for the Indian military. The two countries are seeking to resolve differences on developing and building the Fifth Generation Fighter Aircraft.
Paris swiftly repaid €950 million and received proof of payment as there was concern the former stockholders of Yukos, a Russian oil company declared bankrupt, might try to seize the ships as part of a $50 billion claim against Moscow, the French official said.
Tim Osborne, head of GML, the former holding company of Yukos Oil, declined comment.
It is far from certain such a claim would have worked as the Mistral would have been classed as "navire d'état," or ship of the state, a legal status which puts military vessels out of reach, a lawyer said. An alternative might have been a commercial claim for the funds paid to Russia.
Cornut-Gentille, who sits on the parliamentary finance committee, has written to Sapin asking for details of the repayment to Russia.
Coface reimburses DCNS for repaying the advance payment of €893 million, and the French government has sent €56.7 million for the Russian systems.
Among other questions from Cornut-Gentille:
• When and how was the payment to Russia made or will be made?
• What effect will the payment have on the 2015 budget, and will it be raised by canceling missions or programs?
• If there are no cancellations, then how will the payment be financed?
Sistemy Upravleniya designed and built telecommunications and missile control systems for the Russian Mistral, Tass news agency has reported.
DCNS was prime contractor for the Vladivostok and Sevastopol, held at Saint-Nazaire, northwestern France. DCNS, which is 35 percent held by Thales, declined comment.
Egypt bought a $5.2 billion French arms package comprising a DCNS multimission frigate, four Gowind corvettes and 24 Rafale fighter jets, along with MBDA and Sagem missiles, and is in talks for acquiring two more corvettes.
India is in talks with France on an off-the-shelf order for 36 Rafales.
The Russian deputy prime minister and France's secretary-general for national defense and security exchanged letters on Aug. 5 setting out the terms which allowed their respective heads of state to approve the contract cancellation.