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PostPosted: 05 Aug 2015, 15:35 
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France Will Pay Russia $1.27 Billion for Mistral Non-Delivery

France is rumored to have agreed to pay Russia 1.16 billion euros ($1.27 billion) as a compensation for refusing to deliver two Mistral-class amphibious assault ships built for the Russian Navy, the Kommersant newspaper reported, citing unnamed sources. The exact amount of the compensation has been agreed upon during the talks between Russia's Deputy Prime Minister Dmitry Rogozin and French Defense Secretary-General Louis Gautier, the daily added.

It covers the advance payment and additional costs Moscow incurred during crew training, creating infrastructure to station vessels in Vladivostok and developing four preproduction prototypes of the Ka-52K helicopters. The stern sections built in Russia will not be taken down, according to the sources. Russia's Ministry of Defense is expected to return the end-user certificates after Paris pays the compensation. France will be able to sell the warships to a third party afterwards.

All issues, according to the Kommersant, could be settled in early August. Then Russian President Vladimir Putin and his French counterpart François Hollande will make an official announcement. Earlier, on Thursday, Putin's aide Vladimir Kozhin said that Russia and France agreed the terms of the settlement of the $1.36-billion deal, including the schedule and the amount of compensation. On Friday, Kremlin spokesperson Dmitry Peskov said he had nothing to add to this information.

Source : Sputniknews

Hmm, wonder if China will put in a bid? :lol:

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PostPosted: 06 Aug 2015, 11:13 
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It seems in the end it pretty much played out as has been suggested for the last six months or so: Minimal penalties applied by Russia, but full reimbursement (which they claim has already been paid). Part of the deal is apparently that the Russians will remove all equipment and material that belong to them. I think the only "positive" for France is that Russia agreed to hand the end user certificates of the stern sections over to them once they are satisfied that all their equipment have been returned. This will allow France to use the hulls and to re-equip them for other potential clients. In turn, that means that if France finds a buyer(s), they would not have lost too much in the end. There is of course the risk that they won't find a buyer, which would make it a very expensive loss to them - but at least there is hope.

As for Russia: They lost the ships but got some "free training" in the process (crew, engineers, etc.), and financially they lost pretty much nothing. In fact, due to the weak Ruble at the moment, they actually made a profit in Ruble terms. They did lose significant time though - assuming they still want this class of ships. Apparently there are various studies going on in Russia for a possible replacement, but the most likely scenario is that whatever they build won't quite be in the same class as the Mistrals.

Overall, I am quite disappointed in how the whole thing worked out: This type of collaboration tend to build bridges that in the long run help to smooth over political differences, which I have first-hand experience of. I suppose those that believe the ships would really be used in some sort of empire-building invasion on Russia's side will disagree. However, I have my doubts that it would really impact Russia's foreign policy in any way - they have a big military so it is difficult to see in which way two, admittedly quite useful, ships would have changed the balance. What it has done is to force Russia to look inwards for military equipment and it has made it very unlikely that they will trust the involvement of foreign (at least Western) countries in major multi-national projects like this again. It also forces them to become more self-sufficient, very much like the sanctions that we had in South Africa forced us to become self sufficient. It is a painful and costly way in which to do it, but quite effective as you have no other choice.


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PostPosted: 06 Aug 2015, 15:19 
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Mfezi, I ask this question as you know quite a bit about Russia.
Do you know an estimate in terms of Rubel's, what they paid and what they will get back? And over what time period?
In that respect, I would think Russia got a good return on their Rubel cash investment, if I can look at it that way.

As you say, a break down of building bridges, thanks to politicians and their politics. I think the Germans feel the most pain with their heavy investment in Russia as they chose to be positive with the future with Russia. They had shown good will, I recall just post Soviet period, they sent food aid to a city that was starving due to the state of Russia's economy, a city that was under siege in (Leningrad or Stalingrad) during the war.

We have a bit of that between Canada and USA in breaking down bridges, thanks to Obama. He recently had to show his hand on a oil pipeline topic after hiding for years with an excuse that is was not him holding up approval.


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PostPosted: 08 Aug 2015, 02:42 
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I think the Germans feel the most pain
May i ask what you are talking abut? (im interested)
Aslo, i have no idea why im even here again, as mfezi said past 6 montsh or so :wink: lots of facts :smt023
tell me more on this please " his hand on a oil pipeline" :wink:

sorry, that has nothing to do with topic....ah, maybe making to do with someone trying to sound smart? snooze im tired .... im wondering why i got so many warnings and you can do what you do :-x ost bala bla bla ... im not here for entertainment. i was trying to show things :!: look back, six months or so :wink: look at the lnks ive given, for a reaso again do research :!: :!:


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PostPosted: 08 Aug 2015, 11:31 
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France Loses in Failed Mistral Warship Deal

The saga of the two Mistral helicopter carriers France built for Russia, but refused to hand over because of the conflict in eastern Ukraine, is finally over. The net result is that a French shipyard has been saved at the French taxpayer’s expense, while Russian taxpayers will pay to retool the country’s wharves so the country can build more of its own warships.

The Kremlin said Wednesday night that Russian President Vladimir Putin and French President Francois Hollande have agreed to terminate the 2011 contract; that Russia has already received compensation for its expenses; and that it is preparing to dismantle Russian equipment installed on the ships. Russia, according to the statement, considers “the Mistral matter fully settled.”

The Kremlin didn’t say how much France paid to break its contract, the subject of months of back-and-forth, but the Russian newspaper Kommersant reported that “more than 1.1 billion Euros” ($1.2 billion) has landed in the Russian government’s account. This fits with French Defense Minister Jean-Yves Le Drian’s statement that the compensation was less than the contract’s initial 1.2 billion euro price tag.

Russia had so far paid 785 million Euros for the warships, one of which was to be delivered last fall and the other later this year. Last September, Hollande suspended the deal under pressure from North Atlantic Treaty Organization allies, as Russia looked increasingly involved in the eastern Ukraine fighting. Russia initially talked of a multi-billion-dollar indemnity prescribed by the contract. In April, however, Putin said he wouldn’t demand “any indemnities or over-thetop punitive damages.” Instead, Russia asked France to compensate its outlay for new port infrastructure and the upkeep and training of the ships’ crews.

If Kommersant’s number is correct, France has accepted some of these claims to Moscow’s satisfaction, avoiding a diplomatic spat. Moreover, the newspaper reported that the French government did its best to transfer the funds quietly, lest they be arrested by the shareholders of the defunct oil company Yukos, who won a $50 billion verdict against Russia and are hunting for Russian state assets throughout Europe. The deal was struck “in a spirit of partnership,” tweeted Dmitry Rogozin, deputy prime minister for Russia’s military industrial complex.

Rogozin never liked the Mistral contract. “I have always considered it essentially the private affair of Comrade Serdyukov,” he said last year, referring to disgraced former Defense Minister Anatoly Serdyukov, who was fired in the midst of a corruption scandal in 2012. The Defense Ministry has never been able to adequately explain why it needed the Mistrals. In 2009, Admiral Vladimir Vysotsky, then Russian navy commander, said the Mistrals could have been helpful in the brief 2008 war between Russia and Georgia. They would have allowed the Russian Black Sea Fleet to seal off Georgia’s sea border in 40 minutes, rather than the 26 hours it actually took, he said. Russia, however, didn’t necessarily need to spend 1.2 billion Euros on that kind of time gain, especially since the war was already won.

This doesn’t necessarily mean the contract was the result of a kickback. The ships might have been useful for international exercises and to show the Russian flag on the seas. There was also a theory circulating in Moscow that the deal was political payback for then-French President Nicolas Sarkozy’s role in settling the 2008 conflict with Georgia. Sarkozy brokered the surrender of Georgia’s then President, Mikheil Saakashvili, aiding Russia to avoid international sanctions — an outcome that may have encouraged Putin to act in Crimea and eastern Ukraine years later.

The payback idea makes sense. The French shipyard that built the Mistrals — the former Chantiers de l’Atlantique in Saint-Nazaire — was in a poor financial state before the huge contract arrived. Its owner, STX France, in which the French government has a significant minority stake, faced growing losses in the years before the Mistral deal was signed. In 2010, the company lost 66.3 million Euros on revenue of 538 million Euros. Since then, STX France has been breaking even, and in 2014, the French government helped it to line up another big contract (this time for two giant passenger liners), which should keep the shipyard running for the next four years. Now the French government has refunded the Russian payments, the construction of the two helicopter carriers amounts to a taxpayer-funded bailout of the wharf.

France will eventually sell the Mistrals (the government says there are interested buyers). But it will probably take a loss, even if Canada, India or some other country acquires them, because this would be a distressed sale. In Russia, meanwhile, Rogozin succeeded in convincing Putin that the Mistral fiasco proves Russia needs to build its own warships. Russia’s new naval doctrine, which Putin signed into effect last month, deems it necessary to ensure “the Russian Federation’s technological independence in the areas of shipbuilding and naval equipment in accordance with the state armaments program.”

The Russian Finance Ministry has been calling for cuts to the ambitious, 23 trillion ruble ($359 billion) rearmament program Russia has approved until 2020, but the Defense Ministry said last month it didn’t expect any drastic reductions this or next year. In its naval part, the program centers on localizing the production of equipment Russia used to buy from Ukraine or the West, such as marine diesel engines.

This won’t necessarily be easy. Last month, the navy’s commander, Admiral Viktor Chirkov, told a high-level meeting on the rearmament program that so far, import substitution wasn’t working in engine production: Local factories cannot build engines and other sensitive equipment without imported parts. “They squandered all the technology,” Chirkov said. “You understand that everyone sitting here is spending the government’s money, but there’s no upshot.”
Rogozin agreed that billions of rubles had been spent on research and development without obvious results.

That doesn’t means billions more won’t be spent, despite Russia’s recession. The failed Mistral deal will lead to increased investment in Russian shipyards — just as it did for Saint-Nazaire — and has already strengthened hawkish proponents of Russian autarky, such as Rogozin. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Source: Bloomberg View

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PostPosted: 10 Aug 2015, 08:46 
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jeffreynic wrote:
Do you know an estimate in terms of Rubel's, what they paid and what they will get back? And over what time period?
In that respect, I would think Russia got a good return on their Rubel cash investment, if I can look at it that way.


Hi Jeffrey

It is difficult to estimate, since the exact amounts involved (in Euros) have not been disclosed completely and neither have the dates of repayment. The contract was not complete yet before the whole dispute started, so the final payments had not been made yet by Russia. It seems the advance payments was in the region of 800m to 900m Euros, and France reimbursed Russia for additional costs up to a total of between 1.2 and 1.3bil Euro. To convert it to Rubles is not that easy: When the deal was struck and over the first few years of the program, the Ruble was trading at about 40 Ruble to the Euro. In the last year, however, the Ruble has become extremely volatile and seems to be almost directly linked to the oil price (possible a little to sanctions also, but there is a very clear link to oil price). This means that while it was trading just under 55 Ruble to the Euro a couple of months ago, the recent drop in the oil price again forced it down to about 70 Ruble to the Euro. Because of the volatility, the repayment date is quite important if you want to see what the Ruble expenditure/profit was. According to both the Russians and the French, the full amount has already been repaid, but no-one knows exactly when. If it was a month ago, the Ruble was about 60 Ruble to the Euro. If it was a week ago, the Ruble was about 70 Ruble to the Euro. So, you can see the dilemma in coming up with a number. I would guess that, in Ruble terms, the Russians made about 40% profit, but there are probably a lot of hidden expenses. I think what they gained in knowledge and experience was probably more valuable, with more-or-less a break-even situation in monetary value.

Some numbers here:
http://www.defensenews.com/story/defens ... /31278439/

And an article (one of many similar ones that you can find all over the world news websites) on France's new dilemma of getting rid of the ships as quickly as possible:
http://www.ibtimes.com/france-russia-mi ... ly-2044573


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PostPosted: 10 Aug 2015, 23:02 
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Thank you for guidance mfezi. (i read between lines and i may be wrong on this one but it must be said)
Jeff, im sorry, again. shouldnt have lashed out like that, my bad!
remember the links i gave though when explaining this
micfradus wrote:
tally, are you reading right? russia isnt getting punished, they are signing free trade agrrements everywhere they go, egypt just signed currency trade....the people getting punished are europe!
already covered :wink: but i trully want to say. my bad, sorry.. i expected red ink


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PostPosted: 11 Aug 2015, 01:45 
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Thanks for that reply Mfezi.

It crossed my mind, Russia may have paid for them in Euro's, after all, they sell oil and gas to the Euro zone, they can bank the Euro's.
The Mistral payment could banked in Euro's.
No need to switch it into Rubel's.


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PostPosted: 11 Aug 2015, 07:33 
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Yes, you are of course correct, Jeffrey. The deal was made in Euros. What I posted refer to the equivalent value in Rubles, but I did not mean to imply the money was physically converted back and forth. Only the Russian finance ministry will be able to tell exactly what payment mechanism was used. For example, one option could have been to pay directly out of foreign reserves and reimbursement may have gone straight back to foreign reserves, which would have been Euros in and Euros out. If they used some sort of financing, there are lots of different permutations possible, so I won't even try to go there. As I said, I referred purely to the equivalent Ruble value at the various phases of the project. Whether that matters at all depends on how any reimbursed money is going to be utilized.


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PostPosted: 12 Aug 2015, 12:28 
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http://www.defenceweb.co.za/index.php?option=com_content&view=article&id=40233:egypt-other-countries-interested-in-french-mistral-warships&catid=113:international-news&Itemid=248

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PostPosted: 12 Aug 2015, 23:42 
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I still think egypt as stated before, but my goodness im so hopefull that funds are available for me to say south africa. a few rooivalk mk2 and a couple of these fits Zuma's idea of standby force. i just cant find the money ;(

Edit, i cant remember where i said it but was somewhere around the april may mark when i explained my thoughts for egypt.

but ill clear up some things. I dont think canada, the news is rife already with overspending of the arctic opv project and the berlin combat support ship, china no way....china is evil like russia. india, nope, thats why i anticipate grippen tech transfer and a significant order...what other countries are left looking for this excact capability? egypt, south africa and? brazil?? are they though? i thought their ambitions are fully fletched carriers

Ive been looking when ive said what ive said and why but i found this from 20 may: Again purley ecomomics, but out of the economic alliance, SA is the only one without a carrier cabability. mistrals fit the bill for me. india s building more like the one russia converted for them, china is basing theirs on a russian design and russia is building more. Brazil, well, internet is there for all. all im saying is that money will increas but not for anything more than mstrals. and its a needed capability if what i read the stand by force is to be

im sure i put reasons down before this but may have been a time when was just putting links. i cannot remember anymore as everyday since december was a meer sigh and post. sorry if i peed some off but as i said before it was in my nature to show things. hopefully i can stay away from anything anti russian at this point and go back to asking questions about big guns


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PostPosted: 14 Aug 2015, 21:20 
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we will finally know all
the decision on the Mistral contact will be formally made at the meeting of the defense ministers’ council in late August. Further information will be announced in public.
cant wait as ive speculated soo sooo much

Read this with an open mind, i posted this once for tally ho months ago: $490-million contract signed by NASA with the Russian Space agency on the very day when France cancelled the Mistral contract," Mariani said.
http://tass.ru/en/world/813400 specifically i said look how fast these mistrals will be delivered now
who blocked and why and what reason.

its taken a few months for everything ive said to come to the media but believe me everything ive posted is and was factual :!:

also, im sorry guys but i cant find my reasoning for egypt, just many times where i say like i said, nor can i find them for south africa. im afraid all my off topics have mooved or had red :smt023 ink but those that follow may remeber:

jeffreynic wrote:
Rosh wrote:
Quote:
Pulling out all the Russian systems and replacing them would cost far too much - it's cheaper to build from scratch.

Otherwise we'd sit with the same problem we had with Outies?[

I would be against acquiring the ships for two reasons, but.

The SA government could decide to purchase them if they were cheap enough, ignoring the problematic experience the navy had with Outies.
I guess it would be a status symbol for the government, a headache for the navy's maintenance department.


somewhere here i explained my thoughts but they are gone somewhere around 18march Ah no, just when i was thinking that it really could have been a viable option for san. oh well..before this i had a discussion on capability requirements, alot is missing. anyway i thyink all get the drift mistral inho is a san requirement


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PostPosted: 06 Sep 2015, 21:35 
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Whats's your take on this?
i was following this very closely and made my prediction for egypt on the basis of russian agrrements being signed without the dollar and countries requirements. i know south africa was looking at a smaller version and was hoping somehow without public outrcy russia would have financed south africa instead of egypt
According to unnamed Russian sources close to the deal quoted by Moskovsky Komsomolets, Egypt will purchase the ship with direct Russian financial support and would also have to commit to the purchase of a number of Russian Ka-52 helicopters.

"If this deal goes through, for Russia it is very advantageous, since the loan is in fact a trademark: a large consignment of helicopters will be based at our Russian defense industry, taxes will go into our budget, and the borrower does not receive the money but the product — helicopters made in Russia," the source was quoted.


what is your take on russia south africa nexus?


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PostPosted: 07 Sep 2015, 07:50 
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I feel i must expand on what i said before:
based on my avid following of this forum, i learned from exerts how the defense world works contract wise, Mfezi was integral in this as he cemented what i had read, that beng sai i knew that the joint venture of these ships brought complications visa ve IP and IP transerance. that being said i deduced that russia will still have a say as to whose these ships can go to. again cemented by mfezi in his discusion of (if we sold our grippens)

Al this being said i value experts like you guys and love facts, cause facts alow me to make predictions and pridictions is my personal hobby

there are of course many others here that i value that will just be a long list. what i really want to say is thanks


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 Post subject: Mistrals for Egypt.
PostPosted: 24 Sep 2015, 07:39 
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I think everybody has seen the news about Egypt purchasing the 2 Mistrals built for Russia. With Algeria also haven taken delivery of a vessel with full length flight deck (though on quite a small vessel), these are interesting times for African naval capabilities. Though the "hidden costs" in terms of helicopter commitments and escourt vessels may be high for Egypt


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