Nato concerns over France, Russia deal

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ST PETERSBURG: France and Russia signed an agreement on Friday for Paris to supply Moscow with two Mistral class helicopter carriers made by a French-led consortium in a 1.2 billion euro ($1.52 billion) deal.

The long-discussed purchase is Moscow's first major foreign arms purchase in the two decades since the fall of the Soviet Union. Russia agreed last year to buy the Mistrals, to be made in France, giving it access to advanced technology and alarming some of France's NATO allies.

Under details of the deal given in the past, the ships are to be built by shipyard companies DCNS and STX along with Russia's state-run United Shipbuilding Corporation, OSK. DCNS is quarter-owned by defence electronics group Thales.

France will build two ships, the head of Russia's arms monopoly Rosoboronexport Anatoly Isaikin said, while Russia's OSK will build another two. He did not specify when the two other ships would be built.

One of the main sticking points in the negotiations was whether Russia will get access to the technology used in French ships, giving it a glimpse of more advanced naval weapons and defence systems.

Isaikin said Russia will buy fully equipped vessels. "I don't know who started this rumour," he said, referring to earlier reports that France could sell the ships without the military technology.

President Nicolas Sarkozy hailed the signing of the contract for the two carriers. A statement from his office said it would mean the creation of more than 1,000 jobs in France over four years.

"The signature of today's contract at St Petersburg ... illustrates the strategic dimension of this cooperation for France and Russia and the constant support of the two heads of state to see it carried out," the statement said.

The purchase caused concern among some NATO members, especially in the aftermath of Russia's 2008 war with Georgia. Russia has tried to ease NATO fears by announcing plans to deploy the vessels in the Pacific.

The Mistral-class ships are able to carry up to 16 helicopters, such as Russia's Ka-50/52 choppers.

Their landing barges and hovercraft allow vehicles, tanks and soldiers to be deployed to shore. Last year Russia, the world's second-largest arms exporter and fifth-largest arms spender, spent $61 billion on arms purchases from domestic firms.