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Sarkozy, Russia Sign Contract for Sale of Two Mistral Warships

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Jan. 25 (Bloomberg) -- France and Russia signed a contract for the sale of two Mistral-class amphibious assault ships in Russia’s first big-ticket purchase of military hardware from a NATO country.

France’s state-owned military contractor DCNS and the shipbuilder STX will build the two ships with Russia’s OAO United Shipbuilding Corp. of Russia. The sale may represent about 1.37 billion euros ($1.9 billion), the Russia press agency RIA Novosti reported Dec. 30. Russia’s share in building the first Mistral will be 20 percent and up to 40 percent for the second, RIA said.

“This represents 6 million hours of work and 1,500 jobs over four years,” Sarkozy told STX workers today at the shipyard in the coastal town of Saint-Nazaire. He signed the deal with Russian Deputy Prime Minister Igor Sechin.

While Russia’s neighbors including Georgia and the Baltic countries have expressed concern the ships could be used against them, today’s sale and the November agreement between Russia and the North Atlantic Treaty Organization’s procurement agency for arms trade underscore improved ties between the former adversaries.

“This is the first deal to buy a foreign defense system of such a scale in post-Soviet Russia,” Konstantin Makiyenko, deputy head of the Center for the Analysis of Strategies and Technologies in Moscow, said today by phone. “It is revolutionary, it is a landmark deal.”

The Mistral is a 200 meter (656-foot) ship, capable of carrying as many as 700 combat troops, 16 helicopters and 60 armored vehicles.

To contact the reporters on this story: Helene Fouquet in Saint-Nazaire at hfouquet1@bloomberg.net; Lyubov Pronina in Moscow at lpronina@bloomberg.net

To contact the editors responsible for this story: James Hertling at jhertling@bloomberg.net 85117Z FP <Equity> CN