France, Russia finalise warship sale at G8 summit

France is also investing in building ski resorts in Russia`s North Caucasus.

Last Updated: May 27, 2011, 11:12 AM IST

Deauville: The Presidents of France and Russia say their countries have reached a definitive agreement on the sale of four French warships to Moscow.

French President Nicolas Sarkozy and Russian President Dmitry Medvedev told reporters at the Group of Eight summit in Deauville on Thursday that the deal on the sale of Mistral-class assault warships will be signed in the next two weeks.

The multi-use vessels, which can carry up to 16 helicopters, cost about EUR 400 million (USD 563 million) to EUR 500 million (USD 703 million). Under the deal outlined in December, two will be built by French company DCNS and two by STX and Russia`s OSK.

The US has expressed concerns that a sale would send the wrong message to American allies in central and eastern Europe. The plan has alarmed Russian neighbours.

Tourism in volatile Caucasus

France is to join a Russian bid to turn the violence-torn North Caucasus into a region of world-class resorts.

Meeting at the French resort of Deauville ahead of the G8 summit, the leaders said they would work together to build ski resorts in the spectacular Caucasus mountains where the Kremlin is battling an Islamist insurgency.

France, the first foreign investor to commit to the project, has vast experience in mountain tourism, especially in the building and maintenance of ski and hydrotherapy resorts, a joint statement said.

"France is ready to fully share this experience with Russia," it said, adding that the project would be among "priority directions of the strategic partnership between the two countries”.

Last July, Russian Prime Minister Vladimir Putin said time was running out for extremists in the North Caucasus and announced an ambitious drive to bring prosperity to the conflict-wracked area.

Investors however have not rushed to commit money to the region where Russia fought two wars with separatists in Chechnya in the 1990s.

The current plan does not foresee Chechnya as part of the tourist cluster which will group Dagestan, Adygeya, Kabardino-Balkaria and several other regions.

The statement said Russia`s state company in charge of the project, The North Caucasus Resorts, will team up with French bank Caisse des Depots et Consignations in a bid to attract investors.

While the statement said firm details remain to be hammered out, Russian business daily Vedomosti quoted an unnamed government official as saying that the joint venture`s capital could be EUR 2.0 billion (USD 2.83 billion).

A Kremlin spokesman declined to confirm the report.

The French are ready to invest as long as the Russian government provides security guarantees, the newspaper said.

The unrest in the Caucasus shows no signs of easing, with attacks on officials and police a near-daily occurrence.

Bureau Report