France and Russia nix deal for Mistral warships

France and Russia have mutually agreed to terminate a 2011 contract for France to sell two high-tech 'Mistral' class warships to the Russian Navy, the Elysee Palace announced Wednesday night.

Under the terms of the €1.2bn deal, outlined in a brief note on Twitter, Russia is reimbursed all money paid up front, it has its equipment already installed on the ships returned and France gets to dispose of the hulls in whatever manner it sees fit.

The deal came after an "amicable" conversation between Presidents Hollande and Putin, the communication said.

The Baltic States had long objected to the deal on the grounds that the Mistral ships would greatly enhance Russia's ability to launch attacks in the region which - given Russia's current aggression in Ukraine and belligerent attitude towards the Baltics was of great concern.

Though good news for the Baltic states, the decision is likely to prove controversial in France where jobs are likely to be lost and the cost of the deal will have to be covered.

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