Russia Mistral: Hollande denies striking compensation deal Published duration 31 July 2015 Related Topics Ukraine conflict

image copyright AFP image caption The Vladivostok remains at the shipyard in Saint-Nazaire, western France

President Francois Hollande has denied claims that France has agreed to pay compensation to Russia for cancelling the sale of two warships.

Mr Hollande said no agreement had been reached, contradicting an aide to Russian President Vladimir Putin.

"Discussions are under way. I will make a decision in the coming weeks," Mr Hollande told a news conference.

France stopped the planned sale after the outbreak of the conflict in eastern Ukraine.

The deal, for two Mistral helicopter carriers, was worth €1.2bn (£843m; $1.3bn). Russia made an advance payment of about €840m.

The first of two - the Vladivostok - was supposed to be delivered to Russia in November 2014.

Vladimir Kozhin, a military technology adviser to Mr Putin, said on Friday that negotiations over compensation were "completely finished".

"Everything has already been decided, both the time-frame and the amount," Mr Kozhin told Russian state news agency RIA Novosti.

But Mr Hollande's comments suggest that the agreement is still in question.

Sources close to the talks, quoted by Russia's Kommersant daily, have suggested France will compensate Russia to the tune of €1.16bn.

image copyright Reuters image caption The Sevastopol (bottom) and Vladivostok are seen here in Saint-Nazaire

That sum includes the amount that Russia has already spent on special training for 400 sailors, on port infrastructure in Vladivostok for the two warships and on developing four prototype Ка-52К helicopters.

The compensation deal was discussed last week at talks between Russian Deputy Prime Minister Dmitry Rogozin and French Defence Secretary-General Louis Gautier, Kommersant reports.

The Mistral contract dates back to a June 2011 agreement reached under the previous French President, Nicolas Sarkozy.

Western sanctions have been ratcheted up against Russia since March 2014, when the Ukrainian conflict erupted with Russia's annexation of Crimea.