Done Deal

Mistral Contract Signing

The deal for the first two Mistrals, that is.  With President Medvedev looking on, Rosoboroneksport’s Anatoliy Isaykin and DCNS’ Patrick Bouasie signed the contract at the Petersburg International Economic Forum.  RIA Novosti quoted Isaykin on the €1.2 billion price.  Work can begin after the Russians pay an advance (Versii.com repeated a rumor that the French wanted 80 percent prepayment). 

RIA Novosti also noted Isaykin saying the Russian Mistrals will be identical to French units except they’ll have reinforced hulls and flight decks to handle Russia’s northern waters, and its heavier helicopters.  Isaykin said Russia has an option for two more Mistrals to be built in Russia.  But it’s up to the Defense Ministry to get money for them in the Gosoboronzakaz.

ITAR-TASS made the point that the Senit 9 tactical command and control system, and its documentation, are part of the just-inked deal.  OSK General Director Roman Trotsenko told Rossiya-24, “The French side has gone to an unprecedented level of technology transfer and is transferring technologies, including the programming source codes for battle information-management systems, communications systems.”

Kommersant reported the first Russian unit is expected in 36 months, the second in 48, or 2014 and 2015 respectively.   It cited Trotsenko on Russia contributing up to 40 percent of the work on the two ships to be built at STX in Saint-Nazaire.

While the Mistrals will come with French electronics, the Russians will have the task of outfitting the ships with their own weapons, helicopters, amphibious assault craft, and other systems.

Radio Svoboda asked for some thoughts about the occasion.  NVO’s Viktor Litovkin opined that these expeditionary warfare ships don’t make much sense under Russia’s current military doctrine or in the context of defending the Kurils.  Pavel Felgengauer said the Mistrals may be appropriate for fighting enemies with weak air and naval forces, but Russia’s leadership hasn’t specified who they might be.  Viktor Alksnis complained that they are another stake in the heart of Russia’s dying OPK.  He calls for Russia to modernize its own arms production base instead of buying abroad.  He also fears the French could put an “off switch” in the ships’ C2 systems, effectively turning them into “target barges.”

Aleksandr Golts supports the deal because Russian shipbuilders will participate and get new technologies, but he also because he favors the emphasis on force projection rather than the Navy’s pro-SSBN mission.

Navy CINC, Admiral Vladimir Vysotskiy made some appropriately effusive comments about the capabilities and prospects for employing the Mistrals.

Mistral in Piter (photo: Izvestiya)

Defense Minister Serdyukov was less willing to elaborate saying:

“Let’s build them first, and then we’ll think about where to deploy them.  We have plans to employ them, when they’re closer to ready we’ll disclose them.”

In Moskovskiy komsomolets, Olga Bozhyeva writes that the Mistral deal does several things for Moscow.  An arms sale like this implies a level of acceptance by Europe, it divides old and new Europeans, and it serves as a wedge between the U.S. and its European allies.  She notes that Russian military leaders have kept pretty quiet about Mistral.  And Bozhyeva concludes, overall, it’s a bad deal for Russia.  It’s a high price tag for something that’s not a priority for the fleet.  Its missions are not well thought out.  A relatively old system like Senit 9 won’t help Russia catch up very much.  And Russia didn’t seriously consider Dutch, Spanish, or South Korean shipyards to drive the French price down, but:

“. . . we would have to exclude a certain corruption component, which, in the opinion of many experts, is included in the Russo-French contract (but it’s better to leave this subject to the procuracy).”

As is often the case, Nezavisimaya gazeta sums it all up best:

“The Glavkom [CINC] ought to specify the countries on which our Navy intend to ‘project the power’ of the LHD.  Judging by the fact that it’s intended to deploy the first two ships in the Pacific Fleet, for the defense of the Kuril Islands (can it really be that someone intends to attack them?), then Japan—ally of the U.S., China—our strategic partner or North and South Korea could be the object of this projection.  Again with Seoul it’s somehow uncomfortable.  It’s also an ally of Washington.  And don’t mention projecting power on Pyongyang, apparently, even the Americans aren’t risking doing this.”

“And not everything’s clear with our deck-based aviation for ‘Mistral.’  Our attack helicopters, Mi-24, Mi-28N, Ka-52, and naval Ka-27, Ka-28, Ka-31 are bigger (higher) in their dimensions than French ones, so it’s necessary to redesign the LHD’s hangar deck for them.  This means extra expenditures of financial resources, as well as a change of extremely weak armament for this ship.  Including even air defense.  There are also other problems.  Like the construction of a shore base for the deployment of ‘Mistrals’ on the country’s eastern shore, on the Pacific Ocean.  It still isn’t there.  But to keep such a huge hull tied up at anchor in Petr Velikiy Gulf or in other Far Eastern bays, like it was with domestic Proyekt 1123 class helicopter carriers ‘Moskva’ and ‘Leningrad,’ means to expend their service life in vain and kill it without reason.”

“In a word, the French LHDs, which should enter our Navy’s inventory in 2014 and 2015, could be not a reinforcement of our groupings of ships, which, by the way, also still need to be built up, but a headache for Russian admirals.”

Mistral Endgame?

Mistral (photo: ITAR-TASS)

Maybe.  Maybe not. 

The Mistral contract endgame may in fact be upon us.  But some major players have warned (more than once) of a protracted negotiating process.

Kommersant reports Rosoboroneksport and DCNS signed a “contract” on June 10 for the first two Mistral units, according to a source familiar with the course of negotiations. 

After meeting President Medvedev at the G8 summit on May 26, French President Sarkozy said a “contract” would be signed in 15 days [that would have been June 10].  Now Sarkozy also said in late May that a Mistral “contract” would be signed on June 21 when Prime Minister Putin visits France.  Kommersant suggests this could be an official unveiling of whatever was signed on June 10.  But an RF government source said this isn’t planned, according to ITAR-TASS. 

As for the terms and price . . . the Russians were insisting that the Mistral come equipped with the SENIT 9 tactical combat information system and licensed rights for €980 million, but the French were saying no such tech transfer for €1.15 billion.  Also according to this story, the French don’t intend to provide SIC-21 in the Mistral package.

In contrast to Kommersant, RIA Novosti says what was signed last week was no more than a “protocol of intent” to sign a “contract.”  The news agency said the date and place for the “contract” signing remains up in the air, but it could be the international naval exhibition in St. Petersburg from June 29 to July 3.

It also says the price will be between €1 and €1.2 billion, and the French military still opposes giving SENIT 9 to Russia.

Rosoboroneksport’s press-service denied that a “contract” has been signed, and told media outlets the negotiations are in their concluding phase, and a Mistral contract is in the process of “technical formation.”

Utro.ru sums up what many may think about acquiring four units of Mistral:

“Military experts still don’t know precisely why Russian sailors need them, since all of two [sic] ships will scarcely substantially change the situation in the fleet.  It’s not excluded that Russia, first and foremost, wants the technologies the French use in constructing ‘Mistrals.’”

It’s also not excluded that perhaps some involved want the deal itself, commissions, bribes, and kickbacks, more than they want the ships.

More Mistral Negotiations

Mistral in Piter (photo: RIA Novosti / Aleksey Danichev)

Might as well start the week with Mistral news.  An informed RIA Novosti source in the OPK suggests this week could be decisive for negotiations on the sale of Mistral to Russia.  But can anything really be decisive in a drawn-out process like this?

The news agency’s interlocutor, much like Anatoliy Antonov, says:

“The situation is not very simple, the negotiating process is going with difficulty.”

“The stumbling block remains the ship’s outfitting, disagreement concerns two NATO standard command and control systems — combat information-command system Senit 9 and battle group (fleet) command and control system SIC-21.”

“The French agreed to transfer Senit 9 to Russia without a production license, they don’t want to transfer SIC-21 with the ship at all.”

RIA Novosti reminds that Russia has insisted on Mistral’s transfer with all  its systems and equipment.

Ruslan Pukhov bravely tells RIA Novosti, when it comes to amphibious command ships, it’s a buyer’s market, so Russia will find another country to sell it if France declines.  That’s at least half true, but it’s also true that France is something of a special case.  The Dutch, Spanish, or South Koreans might not be willing to give everything Moscow wants either.

Does That Box Come With Electronics?

The latest Mistral story is more complex than what you’ve probably read so far.

Russian press services report a highly-placed military source claims Paris has “registered” Moscow’s demand for systems and equipment on Mistral that fully satisfy the Russian Navy’s requirements.

Media sources also say the negotiations foresee a state contract for the provision of two Mistrals, spare parts, instrumentation, and essential operator documentation, as well as equipment, services, and construction documentation needed to build two more Mistrals in Russia.

A source also told the wire services preparation for the acquisition of Mistral “is going logically and systematically” within the bounds of the negotiating process with the French side.

Newsru.com, by contrast, claims this is the Defense Ministry’s way of countering reports that Moscow has decided not to buy Mistral since France is trying sell Russia “empty boxes” for a billion euros. 

Newsru is referring to Vedomosti’s story from earlier this week saying the entire Mistral deal is under threat because the ships’ outfitting is unacceptable to Russia since it doesn’t include modern command, control, and communications systems, and is only a “basic variant” of the ship, a “box without electronics” essentially.

Newsru recaps Tuesday’s Vedomosti:

“. . . the preliminary agreement actually didn’t include the construction of two more ships in Russia, or crew training and the transfer of shipbuilding technologies.  As “Vedomosti” stated with reference to sources in the Presidential Administration and the RF Defense Ministry, the negotiations with the French have reached a dead end, and now resolution of the problem is being sought at the political level.”

On the issue of providing C3 systems (specifically, Senit 9 and SIC-21) on-board Mistral, Vedomosti implies it’s more about money than technology transfer.  Russia can either pay an extra 200 million euros for a full electronics fit, or try to argue at the political level for the ships at the price of 890 million euros which was supposedly on the protocol signed late last year by now-retired Vice-Admiral Nikolay Borisov and Deputy PM Igor Sechin.  Other sources have said Borisov and Sechin exceeded their mandate in agreeing to a price well over 1 billion euros.  We don’t really know what was on that protocol.

The point – overlooked by many including yours truly – is that there’s no real contract for Mistral yet, and it’s a long way off.  All there are so far are protocols, agreements, and understandings.  What was signed in January at Saint-Nazaire was an “intergovernmental agreement” for the possible construction of two Mistrals, not a specific contract covering that and the construction of two more in Russia.

Wednesday Interfaks.ru ran its review of the Mistral story concluding that the negotiating process is difficult, but the French have decided to meet Russia’s requirements.

Interfaks also published something else that might be useful when thinking about Mistral:

“Meanwhile in mid-March, Deputy Defense Minister Anatoliy Antonov, who’s overseeing international cooperation issues, told journalists in Paris that Russia doesn’t intend to force the signing of the contract for the purchase of the French ‘Mistral’ helicopter carriers until it’s determined that all technical parameters won’t impinge on the Defense Ministry’s interests.  ‘It’s early to talk about dates, too many technical details have to be decided.  The contract has to be adapted to our conditions.  Complex expert professional work in the verification of all parameters of a future agreement is going on,’ said the Deputy Minister.  And he noted talk about how all technical nuances are reflected and have been laid down in the contract.  ‘The negotiating process is complex, I would say difficult,’ said Antonov.  He added that, essentially, the negotiations have just begun.  ‘We have to discuss the entire complex of issues.  The task of acquiring ships and their technologies has been given to us.  That’s the most important thing,’ said the Deputy Minister.  In his opinion, an important part of the negotiating process is ‘the contract’s price.’  ‘It’s important to understand that on the issue of buying Mistral type ships agreements were reached at the level of the presidents of the two countries, and negotiators have all necessary authorities and instructions.  We have to work calmly and implement all agreements,’ said Antonov.  He noted that now it’s essential that all agreements ‘be put on paper and to reflect the political agreements of the two presidents in figures so that they meet the interests of the two countries.’”

A professional diplomat and negotiator is never going to say a process is easy, and this one isn’t.  But it does sound like there’s a draft contract, while price and exactly what the presidents agreed remains at issue.

Mistral Contract Signing Today

The Elysee announced Sunday that French President Sarkozy and Russian Deputy Prime Minister Igor Sechin will sign the Mistral contract in Saint-Nazaire today.

InoSMI.ru and Militaryparitet.com provided the story from Le Point.

Sarkozy and Sechin will inspect the Mistral and Tonnerre, as well as the Dixmude, which is still under construction.

Le Point says the Mistral deal was originally entrusted to oligarch shipbuilder Sergey Pugachev and his holding company United Industrial Corporation (OPK), and rumors circulated about French and / or Russian middlemen receiving commissions for brokering it.  Ultimately, Russia’s United Shipbuilding Corporation (OSK) — headed by Sechin — took over negotiations with Paris.

Le Point claims the Russians asked the French to provide Link 11 and Link 16 combat information systems along with Mistral.  The French demurred, saying transferring these NATO systems required the agreement of all 27 alliance members.  Moscow reportedly persisted as recently as the NATO-Russia Lisbon Summit, saying this equipment would support its participation in joint operations with NATO.  Its request is formally being studied, but won’t be approved, according to Le Point.

More on Mistral

Vedomosti’s Aleksey Nikolskiy published an informative piece on Monday.

He says the announced deal for the first two Mistral helicopter carriers, built in France, includes spare parts and training for a grand total of €1.3 billion (52 billion rubles).  The deal reportedly includes the option to build two more units in a Russian shipyard.  While the deal’s sealed, the final contract is still being worked between France’s DCNS and Russia’s OSK.

Nikolskiy said the Elysee website said the Mistral package would provide 4 years of work for 1,000 French shipbuilders (5 million man-hours) at STX in Saint-Nazaire.

Paris is selling Moscow the SENIT 9 combat information system aboard Mistral, but apparently without license rights.

The contract for unit one is worth €700 million, and €600 million for unit two.

OSK maintains Russia will get a 20 percent share of the work on unit one, fabricating some sections for the ship in Russia.  Its share of the work on the second unit could be more, according to analyst Mikhail Barabanov.

An OSK representative told Nikolskiy the main goal of this deal is to get modern technology, and a possible Russian builder for the optional units hasn’t been determined.

Nikolskiy juxtaposes two views on Russia’s need for Mistral.  He quotes Barabanov:

“Why does the Russian Navy need this ship which was designed for the French Navy’s overseas expeditions?”

And he repeats General Staff Chief Makarov’s statement from June that the first Mistral will go to the Pacific Fleet to transport forces where they might be needed, particularly the Kuril Islands.

As post-script, Nikolskiy gives a snapshot of what 52 billion rubles for two Mistrals could buy:

• 2 Borey-class (proyekt 955) SSBNs, or
• 3 proyekt 11356 frigates (Talwar– / Krivak IV-class), or
• 50 Su-30 fighters, or
• 800 T-90 tanks, or
• 50,000 apartments for servicemen.

Of course, you can generally double these alternative purchases if Russia builds a third and fourth Mistral.

Is the Helicopter Carrier Tender for Real?

Speaking in Yerevan today, Defense Minister Serdyukov told journalists:

“We have announced an international tender for construction of a helicopter-carrying ship.”

He indicated Russia is talking about two ships.  He also welcomed the French builders of the Mistral to join in the tender.

The tender will take place next month, and the winning bid will be selected before year’s end.

After months of negotiations with France on building Mistral-class amphibious assault ships, the Russians couldn’t reach agreement on the terms of a deal.

The two sides may have agreed on building two ships in France’s STX shipyard.  French President Sarkozy told its workers last month they’d be building two ships with the Russians.

Maybe the Russians wanted to buy one and build three, but Serdyukov says the international tender is for two ships, so it seems likely Paris and Moscow had agreed on a ‘2+2’ formula.  So something else is probably the sticking point.

RIA Novosti suggests talks with Paris stalled over its unwillingness to sell Moscow the NATO standard tactical communications system aboard Mistral, according to an unnamed expert who spoke to Ouest-France.

The expert said the comms system is tied to the SENIT 9 tactical combat information system.  It’s described as an important node NATO isn’t prepared to share with Russia.  The French expert says the Russians “don’t have a very good command of military computers and are trying to fill the gap.” 

Officially, the Elysee says negotiations with Russia continue, it’s confident of a successful outcome, and it isn’t worried about the Russian tender.  It hasn’t commented on participating in it either.  Meanwhile, the French media claims Moscow has stopped its exclusive talks with Paris.