The Mistral Warship Deal: What’s in for France and Russia?

Assoc. Prof. Richard Rousseau*


After two years of negotiations, Russia and France signed a treaty of military cooperation on June 17, 2011 under which two Mistral-class amphibious assault ships, together with their full technological complement, will be sold to Russia. This deal marked the largest transfer of sensitive military equipment from one country to another in history. The agreement is designed to stimulate each country‟s stagnating economy – slowed down by the world crisis –, revive Sarkozy‟s domestic support, appease the French electorate‟s discontent and satisfy the French military lobby‟s demands. Russia is seeking to renew its outdated military and technological base in order to restore the effectiveness of its military deterrence at the regional level. Meanwhile, France will take advantage of this commercial windfall to expand into new arms markets and further boost its foreign policy initiatives [1]
In March 2009, less than one year after the August 2008 Russian-Georgian War over South Ossetia and just a few months after the stock market crash in Moscow, Russian President Dmitry Medvedev announced a major economic recovery plan, which included a targeted infrastructure program designed to reinvigorate the Russian economy and to bring economic growth indicators back to 2000-2007 lev-els. In addition to supporting the usual energy and raw material export activities, the plan, most importantly, also stipulated that significant sums would be spent on streamlining and modernizing the Russian military [2].
The details of these expenditures were disclosed on February 24, 2011, when Deputy Defense Minister Vladimir Popovkin announced a long-flagged rearm-ament plan, set to run through 2020. This ambitious $650 billion weapons procurement program is designed to counter what is perceived as U.S. military encroachment in what the Kremlin regards as its “sphere of privileged interests.” Russia intends to simultaneously acquire and develop new technologies with both military and civilian applications, which will allow it to reduce the size of the armed forces and turn them into professional organizations [3].
The program also includes a downsizing process within the Russian armed forces. Some 200,000 officers will be sent on compulsory retirement and 200 General Officer positions will be abolished (the Russian Armed Forces have some 1,100 General Officers and 350,000 other officer positions). Meanwhile, the number of lieutenants will be increased from 50,000 to 60,000 in order to decentralize the decision-making process and more effectively delegate authority. The lion‟s share of the new spending will be funneled towards Russia‟s nuclear submarine fleet (eight new ones are planned) and the next generation of anti-missile defense (S-500) that will replace the already popular S-300 antimissile system. In addition, by 2020 the Russian Navy will have at its disposal 35 corvettes, 15 frigates, and 400 new ships. Air Force procurement will total 600 warplanes and 1,000 helicopters. However, Russian Army insiders already play down these numbers and allude to the fact that the Ministry of Defense is already behind schedule with this program [4]. They claim that insufficient funds have been allocated from the budget to carry out the proposed changes. With the global economic crisis potentially gaining momentum, such problems and recriminations are not likely to disappear any time soon.

by 2020 the Russian Navy will have at its disposal 35 corvettes, 15 frigates and 400 new ships. Air Force procurement will total 600 warplanes and 1,000 helicopters.

The Russian armed forces will benefit from the adoption of the new multi-role Mig-35 fighter jet and superior equipment, such as the new the Sukhoi Su-35, while a fifth-generation prototype stealth fighter, the Twin-engine jet fighter Sukhoi PAK FA (“Prospective Airborne Complex of Frontline Aviation”), is being developed through tests. The production and updating of the Mil Mi-28 Havoc attack helicopters, Mil Mi-24 gunship and attack helicopters, the two-seat Kamov Ka-52 “Alligator” and the Ka-60\60U\60R “Orca” series of medium transport multi-role helicopters are also accelerating. The army will also be equipped with the Italian light armored vehicle Iveco LMV M65, which was particularly appreciated in Afghanistan when it was used against Improvised Explosive De-vices (IDEs), also known as roadside bombs.
The nuclear strategic forces, which will be cut by one third (33%) under the New START agreements (this agreement supersedes the 2002 Treaty on Strategic Offensive Reductions (SORT)) signed with the United States in April 2010, will be radically modernized – especially missile launchers – to ensure the effectiveness of nuclear deterrence. The Russian Ministry of Defense is also trying to quickly bring into operation the RSM-56 Bulava missile, a three-stage, solid-fuelled, submarine-launched ballistic missile (SLBM) capable of delivering a nuclear warhead launched from submarines. However, the Bulava has a troubled history. After years of failed tests, it was finally successfully test-launched in October 2010. There are, however, still doubts about its operationalization, as a test launch from the Yurii Dolgorukii SSBN submarine scheduled for December 2010 has been postponed until mid-2011 [5].
While RSM-54 Sineva SBLM intercontinental ballistic missiles are already installed and operational on the Delta IV class submarines, the Russian submarine fleet will be further supplemented by six new Yasen/Severodvinsk class nuclear submarines, considered the jewels of the Russian Navy, with its 120 meters in length and capable of carrying 24 ballistic missiles with a range of 5,000 kilometers. This submarine‟s propulsion system is considered by the U.S. Office of Naval Intelligence as the quietest – or the least detectable – submarine manufactured anywhere in the world.
The Importance of the Mistral Warship for Russia
The most important aspect of Russia‟s naval modernization plan is, however, the purchase of the two French Mistral-class warships which will be delivered to Russia in 2014 and 2015 from the Saint-Nazaire-based STX shipyard located in the northwest of France. The two countries are continuing their negotiations for two more Mistral-class warships that would be build in Russia, this time under French licenses.

In addition to providing a significant economic boost and substantial revenue, Medvedev‟s technological rearmament plan also aims to reconnect the government with the heavy industry lobby, the military establishment and those “siloviki” (former KGB men and military officers) who have complained about a lack of structural investment in defense and operational shortcomings that predominantly stem from the obsolescent military arsenal.

The Russian navy consists of outdated but still popular vessels, such as the Sovremenny class missile destroyer, built in the mid-1980s by the Soviet Navy. Russian leaders, however, complain about grave weaknesses of these vessels, citing the slow pace of naval movements during the war against Georgia in August 2008 [6]. Each 21,300 ton Mistral-class ship is a BPC (Bâtiments de projection et de commandement) capable of carrying 16 to 20 heavy combat helicopters, four air-cushioned crafts for landing troops ashore, several dozen vehicles (13 battle tanks and 60 armored vehicles) and from 450 to 900 combat ground troops carrying their weapons for both long and short term deployment. It also can carry onboard a floating hospital and an operational command and control centre.
Negotiations between the French and Russian Ministries of Defense began to intensify during a meeting at the shipbuilding hall in St. Petersburg in June 2009. They then laid the foundations for future cooperation. Negotiations over the Mistral really picked up steam the following year when the French company Thales signed an agreement with the Ural Optical Mechanical Plant, located in Vologda, on the supply of night vision technology to be installed in T-90U tanks. Finally, Franco-Russian cooperation was formalized on January 25, 2011, with the signing of the Cooperation Treaty concerning the Mistral warships.

The agreement set up a joint venture between France‟s Direction des Constructions Navales (DCN) and Russia‟s United Shipbuilding Corporation (USC), two state-owned companies, to construct four fully armed and operational Mistrals on the basis of the formula “2 +2,” i.e. two ships will be built at the Saint Nazaire shipyard and two at the Admiralty Shipyard in St. Petersburg. Both shipyards take their direction from the French and Russian governments respectively. Paris has given Moscow its assurances that the Sinik 9, a highly sophisticated control and communication system that is installed on the Charles de Gaulle aircraft carrier, will be transferred to Russia as part of the deal. Negotiating this agreement was often a complex task because, at the insistence of Paris, clauses on the transfer of sensitive “know-how” had to be framed in precise and elaborate legal terms. In addition, agreeing on a price for the two French war-ships is a daunting task, so much so that it has not yet been established, though it will presumably fall between $1.15 and 1.3 billion.
In addition to providing a significant economic boost and substantial revenue, Medvedev‟s technological rearmament plan also aims to reconnect the government with the heavy industry lobby, the military establishment and those “siloviki” (former KGB men and military officers) who have complained about a lack of structural investment in defense and operational shortcomings that predominantly stem from the obsolescent military arsenal [7]. In mid-May 2011, Alexander Postnikov, Commander-in-Chief of the Russian Ground Forces, stated in effect that it was cheaper to buy three modern German Leopard 2 tanks than one Russian T-90.
The regeneration of the armed forces has been undertaken in accordance with the new Russian National Security Strategy made public on May 12, 2009 [8], which insisted on the need for military reforms and a quick transfer of geostrategic focus from the global to the regional arena, in particular to the Caucasus, Central Asia, and the Far East. The newly purchased French hardware is designed to increase Russia‟s capacity to intervene in short and medium-range theatres of conflict. It comes as no surprise, then, that the Kremlin has announced that the first two Mistral ships will be allocated to the Pacific Fleet, while the third and fourth will be deployed as part of the Baltic and Black Sea fleets, respectively.
Sarkozy and the French Economic and Military Revival
France, in keeping with tradition, has once again lived up to its reputation for being one of the most independent and flexible members of the North Atlantic Treaty Organization (NATO). However, its new strategic business partner, Russia, has a troublesome military past and it is still in conflict with the West over NATO‟s expansion into Eastern Europe. Moreover, the United States‟ insistence on moving forward on the installation of an anti-missile defense system on the territory of former members of the Warsaw pact (now new NATO member countries) may have unintended consequences on Russia‟s home front. According to Anders Fogh Rasmussen, NATO General Secretary, the Mistral agreement should not be labeled as politically dangerous. If one considers that Russia is a reliable partner, then, it should be treated consistently in areas such as defense. NATO members and Russia have worked together for decades to maintain peace, stressed Rasmussen during a meeting of the NATO-Russia Council on June 8, 2011 in Brussels. Nevertheless, the General Secretary‟s arguments and reassurances have not changed the perception, especially in Central and Eastern Europe, that the Franco-Russian deal, much to their dismay, will give Moscow more military and diplomatic clout in its relations with the former Soviet republics and satellite countries [10].
Nicolas Sarkozy gives a lot of consideration to the development of the French industrial sector, seeing it not only as a driver of economic recovery but as a means of restoring his own political standing. In addition, he thinks that an upgraded industrial sector would provide France with an opportunity to regain its national pride. The Mistral deal is one step in that direction. Economic and political expediency are joined up and play center stage to closer and mutually beneficial relations between France and Russia.

The French industry has encountered rough waters in recent years. Many sectors have been faced with dire times, resulting in massive job losses, manufacturing output down across various sectors, and political and economic strife at home.

The French industry has encountered rough waters in recent years. Many sectors have been faced with dire times, resulting in massive job losses, manufacturing output down across various sectors, and political and economic strife at home. The downward economic spiral in the industrial sector started out with a 13% freefall in 2009. Almost two hundred thousand jobs vanished in that sector in a short period of time, which totals 42% of all job losses. Moreover, France‟s share of exports in the eurozone dropped from 16% to 12.5% since 2000. The indicators of rough sailing ahead are reflected in most sectors of the French economy. There are major cracks in infrastructure, frequent breakdowns in the rail transport system, drops in production of nuclear energy due to ageing equipment, recurring power shortages and grid failures in various regions of the country [11].
Tough times for international trade have been tied in with these industrial setbacks in the last decade. For instance, Siemens‟ withdrew from a joint venture with Areva, a French public multinational conglomerate and the world‟s largest manufacturer of nuclear reactors, which forced Avera to buy back shares in its own nuclear reactor for approximately 2 billion Euros (US $3 billion) in January 2009. Then there was the Areva‟s reactor construction disaster in Finland in September 2009. As part of the proverbial fallout the French state-owned nuclear power group had to come up with billions of Euros in penalties to cover the delays and cost overruns in a face-saving effort.
French industry‟s woes continued when it lost a contract for four reactors to Abu Dhabi (South Korea won the contract). This failure was blamed on President Sarkozy, who had personally promoted the deal with the United Arab Emirates (UAE). He had even flown to Abu Dhabi to promote Areva‟s bid. France‟s failure to win the construction project for 42 high-speed rail lines in China, and then a similar contract in Saudi Arabia, (the Medina-Mecca railway project), constituted disappointments of huge proportion in French political circles. Poland‟s decision in 2004 to award China a 49 kilometer highway project instead of France was also hard to swallow. The plethora of problems facing the French industrial sector is so serious that the respected French weekly magazine Le Point, in its February 4, 2010 issue, ran an article entitled “Why We [France] Lose Mega Projects” [12]
The French economy is tied to its industrial base. In contrast to the British economy, service, financial and construction sectors are not strong enough to supplement the industrial production and achieve sustainable prosperity. In effect, it is estimated that for each job created in the industrial sector between 6 and 10 additional positions are generated in the ser-vice sector. Two million jobs have been lost in the industrial sector in the last the decades and the current world economic turbulence is only accelerating this trend. Highly industrialized economies of the Eurozone – Great Britain, Germany and Holland come to mind here – are more diversified, forward-thinking in R&D (research and development), and more integrated into the global economy, achieving by the same token greater productivity gains.
President Sarkozy wants to reverse the current negative trends in the French economy, which Jacques Attali and Nicolas Baverez, two prominent French

Germany is now able to gain a windfall from the upswing in emerging markets (47% of Ger-man exports are to emerging markets, as compared to only 25% of total French exports). Berlin‟s effective employment policies have helped contain unemployment (7.%, as against 9.7% in France in 2010).

economists and intellectuals, describe as the French “déclinisme” (declinism). On March 4, 2010 Sarkozy announced that the French government would take all necessary steps to support the French industrial and manufacturing sectors. The Mistral deal with Russia is reflective of this new emphasis on assisting French industrialists [13].
Another contributing factor that impacts on the justification for the Mistral sale is France‟s relative economic slump in relation to Germany‟s vibrant economy in the last decade. Germany has aggressively developed closer economic cooperation with Russia. Great strides have been made in German since the fall of the Soviet Union and the reunification of the country in 1990. German industrialists are still increasing Germany‟s competitiveness and productivity, and much of this gain is attributed to the strengthening of the high-tech sector. France wants to be able to compete with Germany on the Russian market, at least in terms of finding a commercial niche in the arms trade in what is perceived to be a booming market [14].
Germany is now able to gain a windfall from the up-swing in emerging markets (47% of German exports are to emerging markets, as compared to only 25% of total French exports). Berlin‟s effective employment policies have helped contain unemployment (7.%, as against 9.7% in France in 2010). Germany has also run a lower structural budget deficit than France (3.5% in Germany versus 6% in France) and kept public spending to 45% of GDP, despite the $2 billion spent on the reunification, whereas in France this indicator is more than 50% of GDP.
There are many reasons for Paris to be concerned about the ever-evolving German-Russian strategic partnership. In 2008, that is, before the global economic downturn, German-Russian foreign trade vol-ume jumped by 19.8% to more than 68 billion Euros. That made Russia Germany‟s top trading partner in Eastern Europe, ahead of Poland. That same year, German exports to Russia were worth 32.3 billion Euros, almost equal to its export volume to China (34 billion Euros). More than 6,000 German companies are registered in Russia, with investments that had reached $17.4 billion by the end of 2008. In reality, the investment volume may be significantly higher, as many German enterprises channel investments through third countries, such as Austria or the Netherlands. Economic relations between Germany and Russia did slow in 2009 and 2010 but only slightly.
The Elysee in Paris fully is fully aware that the long-term sustained growth of German-Russian trade stands in sharp contrast to the dropping development of France-Germany or Germany-U.S. business relations. Consequently, France‟s new foreign policy toward Russia and the Mistral sale are examples of Paris seeking to regain the capacity to affect on global issues as a major player on the international scene.
Finally, Sarkozy‟s record low popularity among French voters is perhaps one of the most pragmatic reasons of his intense efforts on pulling off a successful big deal with Russia [15]. It is only one year until the next French presidential election, and as there have been many policy failures, it would be Russian Roulette to refuse to conclude a contract with Russia that is worth a few billion euros and which creates, or at least maintains, “real jobs” for thousands of French workers. Any political leader facing such pressing economic pressures on the home front would easily be willing to turn a blind eye to allegations that Russia is a military threat, whether eminent or not, to French, European or even NATO‟s interests. Any attempt to derail the deal out of an alleged security threat would bring French workers out onto the streets in mass and their protests could turn violent.
For many observers and European leaders, the Russia of today is not the bogeyman of yesterday. For Russia, this deal is multi-layered, not only on a geostrategic level but in terms of how an efficient and modern military will serve as a powerful deterrent to what Russia considers hostile elements in countries of the former Soviet Union, especially in the South Caucasus and Central Asia. It is in some of these newly independent states that real threats are perceived on the horizon by the Kremlin and Russian army generals. Moreover, Russia is fully aware of Chinese economic penetration and demographic realities, and sees these factors as threatening its interests at home and in its “near abroad.”
Cooperation with NATO remains important to Medvedev, especially if it helps to decrease the current technological gap between Russia and the West. For its part, France, while seeking to maintain its competitive strength in military exports, also intends to further diversity and expand its presence in foreign markets. The current war in Libya provides an excellent opportunity to showcase its military hardware and standing as an international player. PR

Notes:

* Dr. Richard Rousseau is Associate Professor and Chairman of the Department of Political Science and International Relations at Khazar University in Baku, Azerbaijan and a contributor to Global Brief, World Affairs in the 21st Century (www.globalbrief.ca) and The Jamestown Foundation.
1) Irina Titova, Russia buys 2 Mistral-class warships from France, Associated Press, June 17, 2011; Ed-ward Cody, Russia to Buy Two Warships in Deal with France, The Washington Post, December 25, 2010; Russia to Buy 4 Mistral Class Warships from France – Sarkozy, Interfax, Military News Agency, March 2, 2010; Russia Hopes to Build Mistral-class Warships on Its Own – Gen. Staff, Interfax. Russia & FSU General News, February 24, 2010; Medvedev Confirms Russian Plan to Buy Mistral Class Warships from France, Interfax. Russia & CIS Business & Financial Newswire, March 1, 2010; Sarkozy: Russia, France Starting Talks on Russian Purchase of 4 Mistral-class Warships, Interfax. Russia & CIS Business & Financial Newswire, March 1, 2010.
2) Russia’s economy to reach pre-crisis level by late 2012, RIA Novosti, December v16, 2009 http://en.rian.ru/business/20091216/157255443.html; Рейтинг – труба (Reiting truba), Kommersant, December 9, 2008, http://www.kommersant.ru/doc.aspx?DocsID=1091360.http://www.kommersant.ru/doc/1091360; Matthews, Owen; Nemtsova, Anna, The Medvedev Doctrine, (cover story), Newsweek (Atlantic Edition), December 1, 2008, Vol. 152 Issue 22, p. 44-47.
3) Russia’s $650B Arms Drive Misguided, Agence France Press, March 17, 2011. http://www.defensenews.com/story.php?i=5986005; Russian Military To Be Fully Rearmed By 2020, RIA Novosti November 24, 2008 http://en.rian.ru/russia/20081119/118402887.html
4) Fred Weir, With Russia’s $650 billion rearmament plan, the bear sharpens its teeth, The Christian Science Monitor, February 28, 2011 http://www.csmonitor.com/World/Europe/2011/0228/With-Russia-s-650-billion-rearmament-plan-the-bear-sharpens-its-teeth; Russia announces rearm-ament plan, BBC, March 17, 2009 http://news.bbc.co.uk/2/hi/7947824
5) Sharon Squassoni, Jane Kaminski The New START Agreement, Center for Strategic and International Studies (CSIS), April 12, 2010 http://csis.org/publication/new-start-agreement; Senate must ratify new START agreement on nuclear arms, The Christian Science Monitor, November 15, 2011 http://www.csmonitor.com/Commentary/the-monitors-view/2010/1115/Senate-must-ratify-new-START-agreement-on-nuclear-arms
6) Kanet, Roger E., Russian Foreign Policy in the 21st Century, Palgrave Macmillan, 2010; De Haas, Mar-cel, Russia’s Foreign Security Policy in the 21st Century, Putin, Medvedev and Beyond, Taylor & Francis, 2010.
7) Spechler, Dina Rome, Russian Foreign Policy During the Putin Presidency, Problems of Post-Communism, Sep/Oct 2010, Vol. 57 Issue 5, p. 35-50; Hahn, Gordon M., Medvedev, Putin, and Perestroika 2.0, Demokratizatsiya, Summer 2010, Vol. 18 Issue 3, p. 228-259; March, Luke, Nationalism for Export? The Domestic and Foreign Policy Implications of the New ‘Russian Idea’, Conference Papers — International Studies Association, 2009 Annual Meeting, p. 1-23; Markoff, Jeffrey, Russian Foreign Policy and the United States After Putin, Problems of Post-Communism, Jul/Aug 2008, Vol. 55 Issue 4, p. 42-51; Osborn, Andrew, Medvedev Enters, but Putin Is Omnipresent, Wall Street Journal – Eastern Edition, May 8, 2008, Vol. 251 Issue 108, p. A10.
8) Richard Rousseau, „The “New” Russian Foreign Policy: A Time-Honored Russian Tradition,‟ Eu-rope‟s World, May 24, 2010 http://www.europesworld.org/NewEnglish/Home_old/PartnerPosts/tabid/671/PostID/1441/language/en-US/Default.aspx
9) Vladimir Socor, NATO Disinclined to Debate Mis-tral Affair, The Jamestown Foundation, Eurasia Daily Monitor, December 9, 2010 http://www.jamestown.org/programs/edm/; France ready to build Mistral for Russia in 2013 The Jamestown Foundation, Eurasia Daily Monitor, October 29, 2010; Vladimir Socor, Russia Launch-es International Tender for Warship Procurement, The Jamestown Foundation, Eurasia Daily Monitor, October 10, 2010; Vladimir Socor, US Embassy in Moscow Indicates Acceptance of Mistral Deal, The Jamestown Foundation, Eurasia Daily Monitor, May 3, 2010.
10) Nicolas Baverez, L’industrie française victime du colbertisme, Le Point, February 25, 2010.
11) Pourquoi les mégacontrats nous échappent, Le Point, January 28, 2010 http://www.lepoint.fr/archives/article.php/420510
12) Guisnel Jean, Le Mistral accueille des hélicoptères russes, Le Point.fr, January 12, 2009; Négociations exclusives entre la France et la Russie pour la vente de quatre navires Mistral, Le Point, January 3, 2010
13) Malgré la reprise, l’économie française ne devrait pas rattraper son retard, Agence France Press, June 18, 2010 http://www.lepoint.fr/societe/malgre-la-reprise-l-economie-francaise-ne-devrait-pas-rattraper-son-retard-18-06-2010-467927_23.php
14) Sylvain Besson, Sarkozy se met en retrait, Le Temps (Genève), February 13, 2010.

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