Article Posted on : - Dec 31, 2010

MOSCOW (AFP): Russia will pay France 1.37 billion euros (USD 1.81 billion) for two Mistral-class assault warships that Moscow agreed to purchase from the NATO member last week, according to news reports.

“The first ship will cost 720 million euros and the second 650 million euros,” the RIA Novosti news agency cited a source close to the negotiations as saying on Thursday.

The deal, which involves joint construction of the vessels, is the first sale to Russia of such naval high-tech by a NATO country.

It has been condemned by Alliance members from the three Baltic nations, with leaked cables showing that US Defence Secretary Robert Gates also raised the issue while on a visit to Paris this year.

The helicopter carrier costs about 500 million euros (USD 650 million) and it was not immediately clear why Russia was paying a premium.

Moscow had sought to purchase the craft together with their sensitive equipment and the December 24 announcement in Paris made no mention of whether Russia had got its way.

The source close to the negotiation said Moscow was paying a higher price for the first craft because most of it would be produced in France, with Russia's share in the project growing by the second vessel.

“If Russia's share of construction on the first ship is 20 percent, it may reach up to 40 percent for the second ship,” the source told RIA Novosti.

The source said the third and fourth ships would be fully manufactured in Russia as per agreement, but gave no time frame of when the craft would be built.

A Mistral-class ship can carry up to 16 helicopters, four landing craft, 13 battle tanks, around 100 other vehicles and a 450-strong force. It has facilities for a full command staff and is equipped with a 69-bed hospital.