Russia denies snub in Mistral deal

MOSCOW, March 4 (UPI) -- Russia has denied reports of a hitch in contractual talks with France on the purchase of Mistral class helicopter carriers for the Russian navy.

"This information is false," said Dmitry Peskov, spokesman for the office of Prime Minister Vladimir Putin. "It is a large undertaking, and there are always certain issues. This information, though, is unfounded."

Peskov's remarks followed a report by Russia's Kommersant business daily saying that recent talks between Russian state-arms exporter Rosoboronexport and France's DCSN had ended in a deadlock.

Following long negotiations, Russia agreed in December to buy at least two of France's Mistral-class carriers in an unprecedented military deal sealed between the Kremlin and the West.

Under the agreement, signed in January, the initial pair of carriers would be built jointly by France and Russia at the STX shipyards in Saint-Nazaire, France. The remaining two would be manufacturer in a joint venture in St. Petersburg, Russia.

Kommersant reported that the talks stumbled on the final price tag of the project.

"Russia insists it will pay no more than $980 million for two Mistral-class ships, while France insists on a contract worth at least $1.15 billion," Kommersant reported.

It also cited a source privy to the talks as saying the two sides have a number of issues on which they disagree in principle, primarily on the price of the ships that are being bought.

The deal marks the first time in modern history that Russia moved to make such a major defense acquisition abroad, underscoring its fast-evolving relationship with former Cold War enemies.

Designed to attack the shore from the sea, the Mistral class is viewed as an ideal weapon for Russia against possible uprising by nearby countries.

The price for each vessel is estimated at around $380 million and the building venture will be a 50-50 project.

The Mistral amphibious assault ship can carry 16 heavy or 35 light helicopters, dozens of tanks, 450 personnel and up to 70 armored vehicles, including 13 battle tanks.

A senior Russian general last month said that Moscow was considering deploying the ships in the disputed Kuril Islands, which are also claimed by Japan.

Although the financial details of the deal weren't disclosed ahead of January's signing, the sale signaled a triumph for French President Nicolas Sarkozy who pushed for the purchase to boost his country's sagging defense industry and rising unemployment.

The deal is expected to secure thousands of jobs in the French shipyards. Still, France's NATO partners have voiced concern about arming Russia with modern Western weaponry.

France is expected to put forward the final commercial proposal on March 15.