The $1.6 Billion Warship Deal With Russia Is Now A Huge Headache For France

Suspending the sale of two Mistral-class warships to Russia would cost France as much as $1.3 billion, a French diplomat told BBC.

On Wednesday, French President Francois Hollande decided to suspend delivery of the warships in a signal of Western cohesion amid Russia's continued escalation in Ukraine.

Russia has reportedly paid much of the $1.6 billion contract, so Paris would have to reimburse that money as well as pay an extra $328 million penalty payment.

Moscow still expects the warship to be delivered, noting that Paris would have problems finding a new buyer because the vessels were built to meet Russia's requirements with Russian equipment.

"If the contract is suspended, the French side's headache will be worse than ours," Oleg Bochkaryov, deputy chairman of the government's Military-Industrial Commission, which helps oversee the defense industry, told Interfax.

The first ship - called the Vladivostok - had been scheduled for delivery in October, and Russian soldiers were sent to France in June to begin training on the first Mistral.

The Mistral helicopter carrier warships would plug a hole in Russia's military capabilities. Russia's Black Sea fleet is not believed to have the capacity to launch a land invasion, a problem an amphibious ship like the Mistral would solve.

France held out under U.S. pressure for a long time. Hollande was even prepared to push the deal through after the downing of Malaysia Airlines Flight 17 over Ukraine. But on the eve of a NATO summit - where Ukraine will be a key topic - Paris decided to hold off for the time being.

"Russian actions in eastern Ukraine have breached the foundations of security in Europe," read the statement from Hollande's office, which added that conditions were "not met" for the delivery to continue as planned.