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France refunds Russia €1.2bn for undelivered warships

After months of arduous negotiations, Paris agreed on Friday to compensate Moscow €1.2 billion for cancelling the sale of two warships, a Russian offical has said.

The two helicopter carriers «Sebastopol» and «Vladivostok» - built for the Russian Navy, are rooted at the shipyard of Saint-Nazaire in western France. Taken December 20 2014.
The two helicopter carriers «Sebastopol» and «Vladivostok» - built for the Russian Navy, are rooted at the shipyard of Saint-Nazaire in western France. Taken December 20 2014. AFP PHOTO / JEAN-SEBASTIEN EVRARD
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The first of the two helicopter carriers - the Vladivostok - was supposed to be delivered to Russia in November 2014. But now, never will.

On Friday, Paris agreed to compensate Moscow for refusing to honour the 1-billion euro contract signed in 2011, accusing Russia of meddling in the Ukraine conflict.

The Mistral contract was worth €1.2bn. Russia made an advance payment of about €840m.

Last December, Russian marines travelled to Paris hoping to go back with the two Mistral-class helicopter carriers, but they are still rooted at the shipyard of Saint-Nazire in western France.

The affair has strained bilateral relations and embarassed President François Hollande, who has been split between economic interests and his desire to put pressure on Vladimir Putin.

Western sanctions have been ratcheted up against Russia since March 2014, when the Ukrainian conflict erupted, with Russia's annexation of Crimea.

The compensation deal was clinched last week at talks between Russian Deputy Prime Minister Dmitry Rogozin and French Defence Secretary-General Louis Gautier, Russia's Kommersant daily reports.

Paris had initially offered 785 million euros, but Moscow rejected it saying the cancellation had negatively impacted its economy.

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