Putin said Dec. 6 that he hopes the contract will be fulfilled. That came a day after French Defense Minister Jean-Yves Le Drian said the carriers may never be delivered, exposing France to penalties from Moscow.
French President Francois Hollande last month suspended delivery of the first ship in protest against Russia’s role in the unrest in eastern Ukraine. Yesterday, Russian sailors training on the ship began their trip back home.

France Stuck

“If gestures are sent by Russia as we expect, there would be no reason to impose new sanctions but on the contrary to look at how we could bring about a de-escalation from our side,” Hollande said before an EU summit in Brussels yesterday.
DCNS would be reimbursed by the French government in case of a cancelation, and insurance might also mitigate the cost, Maulny said. France has canceled weapons deliveries in the past, including to South Africa in 1977, to Irak in 1989 and to Libya in 2011, he said.
There may not be much the French government can do with the two Russian vessels.
The 199-meter-long ships, designed to accommodate Kamov helicopters, have Russian user interfaces and other equipment. It may be hard to sell to other customers as several of their hull blocks were built by a Russian shipyard. The French Navy already has three similar ships and doesn’t need two more. It also has other priorities such as frigates and submarines, and its budget remains constrained.

Sarkozy’s Role

France may try to sell or rent the ships to the EU for humanitarian missions or to NATO, Maulny said, adding, however, that such a deal would be seen as a provocation by Moscow.
The contract for the two vessels was signed in 2011 by Hollande’s predecessor Nicolas Sarkozy, who at the time said it would preserve more than 1,000 jobs amid dwindling demand for ships, and ignored criticisms from allies, including the U.S.
Payment from DCNS may cover STX France’s part of the Russian contract. Without that, it would have been a dark cloud over an otherwise brightening outlook for the shipbuilder.
STX France, which saw a 33 percent drop in revenue to 510 million euros in 2013, is only starting to benefit from a recovery in the global demand for cruise liners.
On top of Sevastopol, STX France is currently building the 361-meter long Oasis 3 for Royal Caribbean Cruises, Ltd., which will be the world’s largest cruise ship when delivered in 2016.

Buoyant Outlook

It has three other liners in its backlog to be delivered from 2017 to 2019, and this month signed a preliminary contract for two more valued at 1.2 billion euros.
“Shipbuilding has picked up,” Patrick Pirrat, who’s in charge of industrial process innovations at STX France, said during a Dec. 1 press visit to Saint-Nazaire. “We have a strong potential, but competition from Asia, Northern Europe and Italy is fierce.”
Italy’s Fincantieri SpA, Germany’s Meyer Werft Gmbh and STX France had a backlog of 29 cruise ships worth $22.3 billion as of the end of last month, according to G.P. Wild (International) Ltd., a U.K-based cruise industry consultant.
“The outlook for the industry at the moment is quite buoyant, the order book is quite full, and the ships in general are getting bigger,” said Peter Wild, managing director of G.P Wild, in a phone interview.
That has made the Russian diplomatic row less of a worry for the company, which is racing toward its construction schedule for the Sevastopol.
“We haven’t been told to stop construction,” said Delphine Gledel, a spokeswoman for STX France. “Including subcontractors, more than 300 people are working on it, with a bit less than a year of work needed to complete it.”