France Will Renege on Russian Contract, Says Pres. Francois Hollande

Eric Zuesse

On November 25th, French President Francois Hollande announced that France, which has already missed two deadlines to deliver to Russia two completed Mistral helicopter-carriers to Russia, won’t deliver either ship until Washington has no further complaints about Russia’s support of breakaway rebels in Ukraine’s southeast. Russia had already “mostly paid for” both of these ships, though details of the deal and prepayment have not been made public. Only the delivery is at issue here. Non-delivery by France would also raise a possible charge of theft against France, because, according to Russia’s Deputy Prime Minister Dmitry Rogozin, one-third of the ship is Russian-made, and, “The stern section of Mistral was made at Baltic Shipyard in St. Petersburg. That is why if they want to keep the ship, we will have to tear away its stern section and get it back to use it in other ships,” and that scenario is out of the question. Yet some in the U.S. Congress are demanding it, and suggest that “NATO could buy or lease them as a shared alliance asset,” though the ships were made according to Russian specifications and don’t meet NATO’s.

The Russian Government says that if the matter extends beyond a third deadline at the end of this month, and the first ship is still not delivered, then Russia will activate the non-delivery penalty for that ship, which, according to the BBC, would be around a billion dollars.

Hollande has been under terrific pressure from President Obama to renege on the contract, but French shipyard workers and others have held public demonstrations for France to honor the contract, because of the extensive harm to French shipbuilding and other industry that would result from France’s reneging on an international contract: it would hurt all of French industry if the French Government were to prohibit contract-fulfillment over political differences.

The French President has, evidently, chosen the American President over his own country, but the penalty lawsuit from Russia will probably drag on for a long time, because Hollande used careful terminology in his renege-statement: he has “indefinitely suspended” delivery, not “cancelled” it. Consequently, the question as to precisely when France would “renege,” and would consequently be in technical default on the deal, would need to be adjudicated.

Russia says that they don’t urgently need these ships, and can continue on for a few more years with their existing carrier-set-up while they build their own ships to replace the two made-to-order Mistrals. In that eventuality, France’s penalties on both ships could amount to nearly enough to pay Russia to build their own carriers, so that Russia could end up getting both new ships, of Russia’s own manufacture, at little or no cost. This might be a French gift to Russia, but it would hurt France’s commercial reputation even more than the penalties would be costing France.

The U.S. news media have widely condemned France for not having earlier said that they would renege on this deal. For example, a Republican, anti-Obama, columnist for the Washington Post said that “France’s attempt to sell warships to Russia is both a ‘sell the rope to hang themselves’ moment and a comment on U.S. stature these days.” (She didn’t notice that the ships had already been sold and paid-for.) If President Hollande goes through with his stated intention to “indefinitely suspend” delivery, then perhaps he will win some new fans in the United States, but it probably wouldn’t do anything to win President Obama any new Republican friends. Nothing that Obama has done thus far has won him support from Republicans. France’s President isn’t likely to win their support, either; but, like Obama, Hollande seems to be trying hard to win it, no matter what French laborites and industrialists might wish.

Obama doesn’t possess much clout among Republicans, but he still has lots of clout among some other world-leaders, for reasons which aren’t entirely clear, but for which France, in particular, could pay dear.

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Investigative historian Eric Zuesse is the author, most recently, of  They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010,  and of  CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.

 

 

 

 

 

 

 

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  • Robert Barsocchini

    Very interesting internal workings. Thanks for keeping us updated.

  • J.Galt

    I just read on another site that the Russians were now aboard the first one and the second one (the Sevastopol) was being floated for sea trials to be released to Russia later.. Where is the truth? Certainly not coming from Hollande.

  • Party Like 1999

    The reason France is doing what Obama say is Israel Lobby… Because Israel Lobby control corrupt US central bank which is prop up corrupt France central bank. Obama extort Hollande this way. Obama run all EU this way.

    • Me Who

      Close but also UK eu wants to diversify oil and prevent Russian economic success if they’re left out of the profiting. The US is being used for military because the economies are intertwined. Remember the US was settled by European countries, much like Israel.