POLITICS Vs ECONOMICS! ECONOMICS wins................ PARIS—France is preparing to train hundreds of Russian seamen to operate a powerful French-made warship this month, defying calls from the U.S. and other Western allies to keep the vessel out of the Kremlins hands, people familiar with the matter say. More than 400 Russian sailors are scheduled to arrive on June 22 in the French Atlantic port of Saint-Nazaire to undergo months of instruction before some of them pilot the first of two Mistral-class carriers back to Russia in the fall, said one of these people. The contract is being fulfilled, as they say, to the letter, without any delays in payments or work, said Vyacheslav Davydenko, spokesman for Rosoboronexport, the Russian state-arms company that is buying the ships. The training is a pivotal step that deepens Frances commitment to fulfilling the €1.2 billion ($1.6 billion) contract to supply Russia with the carriers, which are built to launch amphibious attacks with landing craft, helicopters and tanks. The U.S. and other allies have called on the government of President François Hollande to cancel the contract, arguing the ships will significantly enhance Russian naval power at a time when the Ukraine crisis has raised tensions with the Kremlin to their highest levels since the Cold War. French officials say Mr. Hollande is expected to discuss the Mistral deliveries with President Barack Obama when the leaders meet for dinner in Paris on Thursday, the eve of D-Day commemorations on the beaches of Normandy. The French leader has also scheduled a second-—and separate—dinner that evening with Russian President Vladimir Putin. Franco-U.S. tensions are already on the menu: Mr. Hollande is set to express his concern over the U.S. investigation into BNP Paribas SA, BNP.FR +1.16% French officials say, which is potentially facing fines of over $10 billion for breach of U.S. sanctions. Paris insists the training doesnt tie its hands and that it wont make a final decision on the ships delivery until October. But Mr. Hollandes government also has said France intends to honor the contract, and privately officials give no indication they will renege. Frances ability to reverse course on the delivery, defense analysts say, will be diplomatically and commercially constrained once the Russian Navy arrives on its shores to begin the training and prepare to drive the carrier home. We have said that given the current context its not the right timing for those types of transactions to move forward, said Ben Rhodes, a senior White House official who accompanied Mr. Obama to a Group of Seven summit in Brussels on Wednesday. We ourselves have put restrictions on certain high-tech materials that could go toward the Russian defense industry. The tug of war over the Mistral illustrates how Europes reliance on Russian resources risks unraveling strategic alliances that helped the West win the Cold War. The European Union is deeply divided over how far the bloc should go in imposing sanctions on Russia over its Ukraine incursion. Russian natural gas powers homes and businesses across Germany, the EUs biggest economy, while Russian oligarchs store their fortunes in U.K. banks. Wednesdays G-7 was convened without Mr. Putin in an attempt to isolate him on the world stage. But Western diplomats gathering in Brussels say there are some signs Russia may be easing pressure on Ukraine following the May 25 presidential election. That has triggered a fresh debate in Europe and the U.S. about whether to ratchet up sanctions. The G7 will make clear that further sanctions are available if Mr. Putin doesnt take steps to calm tensions, German Chancellor Angela Merkel said as she arrived for the meeting. France, hobbled by decades of deindustrialization and rising labor costs, is hungry for large defense contracts that could help get the countrys beleaguered shipyards back on their feet. Saint-Nazaire, a port that boasts a proud history of building Frances biggest ships, now relies on the occasional cruise-ship contract for economic survival. The government says about a thousand jobs are at stake, in a country with more than 10% unemployment and a stalled economy. Calling off the Mistral contract, a French official said, would be akin to shooting yourself in the foot, forcing Paris to take the costly step of reimbursing Moscow. France has already completed the first ship and built half of the second Mistral, which is scheduled for delivery in 2015. The second ship is named the Sevastopol after the Crimean port that serves as a headquarters for Russias Black Sea Fleet. The Mistral, which looms over the town, is a potent weapon. The length of more than two football fields, the ship is designed to edge up to a shoreline and deploy more than a dozen tanks and attack helicopters as well as hundreds of troops. This type of ship is also an integral part of the North Atlantic Treaty Organizations defenses, using sensitive communications technology to coordinate operations with other NATO ships. The potential transfer of that technology to Russia has long worried policy makers on both sides of the Atlantic. The ship also plugs a crucial gap in Russias armed forces. Moscow boasts one of the worlds largest armies and a formidable air force. But Russias Black Sea fleet lacks an amphibious vessel like the Mistral, capable of launching a land invasion. That weakness deprived Moscow of a crucial knockout punch in 2008, when Russian troops invaded Georgia but never managed to dominate the former Soviet countries shoreline, forcing a stalemate.
Posted on: Wed, 04 Jun 2014 18:46:59 +0000
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