France agrees to reimburse Russia for cancelled Mistral warship deal

French president Francois Hollande i's office announced on Wednesday (5 August) that a deal has been reached with President Vladimir Putin i to pay Russia compensation for cancelling the delivery of two French Mistral warships over the Ukraine crisis.

Russia will be "fully reimbursed" for the two warships, the Elysee Palace said in a statement.

According to Le Figaro, France will pay back a little less than €1bn to Russia, a sum that falls short of what Moscow initially demanded (€1.2bn) and is more than what Paris had said it would pay (€800m).

The payment covers what the Kremlin had already paid to Paris for the ships as well as some costs to do with the training of Russian sailors at Saint-Nazaire, a port town in the west of France, in spring this year.

Both the Kremlin and the French government said they considered the matter closed.

In 2011 France and Russia signed - during former Nicolas Sarkozy i's term - a deal for two advanced Mistral helicopter assault ships worth €1.2 billion.

Russia paid €800 million up-front for the deal that was supposed to be the largest arms sale ever by a Nato country to Russia.

But French president Francois Hollande suspended the delivery of the first ship in September 2014 after the EU took sanctions against Russia for its involvement in the war in Ukraine.

French defence minister Jean-Yves Drian has now announced that the two ships are for sale. He said on Thursday (6 August) that a number of unspecified countries have "made their interest known".

Each of the boats can carry 16 assault helicopters, 450 troops and up to 50 armoured vehicles and has a full hospital on board.

Food sanctions anniversary

In another fall-out from the Ukraine crisis, Russia introduced on 6 August 2014 a ban on food imports from EU countries and prolonged it last month for one more year.

The food sanctions were in retaliation for EU sanctions on bank transactions and the black-listing of high-ranking Russians over the Ukraine crisis.

Russia marked the one-year anniversary of its ban on Western agricultural products on Thursday with president Vladimir Putin's ordering destruction of contraband food.

Putin said the ban on EU food helps create incentives for local agricultural producers. But it also leads to food scarcity among ordinary Russians.

Russian agricultural watchdog Rosselkhoznadzor has intercepted over 280 attempts to bring sanctioned goods into Russia from Kazakhstan and Belarus, the Russian Izvestiya newspaper reported on Friday

Farmers in France, Belgium and Germany have staged protests against falling prices, especially for milk and dairy products, following the Russian ban.

The situation forced the European Commission to extend a multi-million euro aid package to help the farmers.

"With the ban prolonged, we need to continue to provide a safety net in order to give security to producers who continue to face difficulties in relation to the ban," EU farm commissioner Phil Hogan i said in a statement on 30 July.

The sanctions have forced the EU to buy up butter and milk powder - a reminder of a past era when the EU was plagued by butter mountains and milk-lakes.

The commission said that some 108,652 tonnes of butter and 40,045 tonnes of skimmed milk powder have been offered to private storage since the start of the scheme in September 2014.

Around 770,000 tonnes of fruit and vegetables has been withdrawn from the markets at a cost to the EU budget of around €155 million.