Paris (AFP) - French President Francois Hollande said Sunday that negotiations with Moscow were under way to find a solution to a dispute over the sale of two Mistral warships, frozen over the Ukraine crisis.

"We are busy negotiating a solution to the crisis," over the 1.2 billion euro ($1.5 billion) sale, Hollande said on French television.

The delivery of the first warship has been suspended for six months over Russia's role in the Ukraine conflict, straining ties between Paris and Moscow.

Russian President Vladimir Putin last week dismissed the refusal to deliver the ship, but said he expects France to repay the money paid.

"Of course not delivering the ships according to a valid contract is a bad sign, but from the point of view of supporting our defence capabilities, to tell you frankly, this has no importance," he said.

The Mistrals have placed France in a sticky situation.

If it breaches the contract with Russia it faces hefty fines.

But it would also risk the wrath of its allies around the world if it were to deliver the hot-button technology to Russia at a time when Moscow is in the diplomatic deep-freeze over the Ukraine conflict.

Despite a ceasefire in Ukraine, fighting has not entirely stopped and Hollande has said repeatedly that conditions were "still not right" for the delivery of the warships.

The French president said "we will see if we discuss it Friday" when he meets Putin during a trip to Armenia.





