France Responds To US BNP Fine, Will Train Hundreds Of Russian Seamen To Operate French-Made Warship

In the aftermath of the Russian sanctions, which French president Francois Hollande vehemently approved after constantly slamming Russia's involvement in the Ukraine conflict, and even went so far to threaten the cancellation of a delivery of a powerful French-made amphibious assault warship, the Mistral, to be delivered to Russia something happened: in the latest demonstration of its impotence to punish domestic bankers, the US decided to slap a French bank, BNP Paribas with a $10 billion fine for money laundering.

As a result, France has suddenly found itself battling two populist fronts: on one hand it had to continue its foreign policy track of siding with NATO and the US when it comes to Russian developments; on the other it had to responds to howls of protest from the population bashing the US for having the temerity to punish its flagship bank (recall "France Furious At US $10 Billion BNP "Masterful Slap", "Racketeering" Fine").

Today, it was revealed that in weighing the two evils, it picked what it thought was the lesser one, and as the WSJ reports "a group of 400 Russian sailors are scheduled to arrive on June 22 in the French Atlantic port of Saint-Nazaire to undergo months of instruction before some of them pilot the first of two Mistral-class carriers back to Russia in the fall, said one of these people."

As the WSJ explains, the training is a pivotal step that deepens France's commitment to fulfilling the €1.2 billion ($1.6 billion) contract to supply Russia with the carriers, which are built to launch amphibious attacks with landing craft, helicopters and tanks.

That this is taking place even as the U.S. and other allies have called on the government of President François Hollande to cancel the contract, "arguing the ships will significantly enhance Russian naval power at a time when the Ukraine crisis has raised tensions with the Kremlin to their highest levels since the Cold War," demonstrates conclusively that money talks and diplomacy walks. It also demonstrates that in the increasingly more fragile western alliance against Russia (recall further that German commercial interests have made it quite clear they will not agree with any further Russian sanctions over fears of lost revenue), Obama's foreign policy partners are dropping like flies when the opportunity cost is lost business with the Kremlin.

More from the WSJ:

Paris insists the training doesn't tie its hands and that it won't make a final decision on the delivery until October. But Mr. Hollande's government also has said France intends to honor the contract, and privately officials give no indication they will renege.

France's ability to reverse course on the delivery, defense analysts say, will be diplomatically and commercially constrained once the Russian Navy arrives on its shores to begin the training and prepare to drive the carrier home.

"Four hundred Russian trainees are rather difficult to keep below the radar," said Nick Witney, a defense analyst with the European Council on Foreign Relations. Other observers say that Paris's credibility to deliver on future contracts is also at stake.

As noted, Obama will not be happy and the training of Russian seamen will surely be a topic of hot debate between Obama and Hollande when the two meet in Paris today, on the eve of D-Day commemorations on the beaches of Normandy, where ironically Russia's Putin will not be present, but Ukraine's new "chocolate king" president will be.

It is not just Obama who will be furious with the latest revelation, further impairing his foreign policy credibility: other European nations are sure to voice their anger too, most notably Poland which feels particularly threatened by developments in the Ukraine:

For months, France has faced staunch opposition from the Obama administration and other Western governments including the U.K. to the plan to sell the ships—criticism that has grown in the wake of Russia's annexation of Ukraine's breakaway Crimea region. In an interview published in French daily Le Monde on Monday, Polish Foreign Minister Radoslaw Sikorski warned Russia might use the ships to "threaten neighbors."

"We have named Russia as an aggressor in Crimea, and I don't think France would want to be supplying useful arms to an aggressor," Mr. Sikorski said.

However, as stated earlier money, Russian money, talks:

The tug of war over the Mistral illustrates how Europe's reliance on Russian resources risks unraveling strategic alliances that helped the West win the Cold War. The European Union is deeply divided over how far the bloc should go in imposing sanctions on Russia over its Ukraine incursion. Russian natural gas powers homes and businesses across Germany, the EU's biggest economy, while Russian oligarchs store their fortunes in U.K. banks.

France's economy—hobbled by decades of de-industrialization and rising labor costs—is hungry for large defense contracts that could help get the country's beleaguered shipyards back on their feet. Saint Nazaire, a port which boasts a proud history of building France's biggest ships, now relies on the occasional cruise-ship contract for economic survival.

The government says about a thousand jobs are at stake, in a country with more than 10% unemployment and a stalled economy.

Calling off the Mistral contract, a French official said, would be akin to "shooting yourself in the foot," forcing Paris to take the costly step of reimbursing Moscow.

France has already completed the first ship and built half of the second Mistral, which is scheduled for delivery in 2015. The second ship is named The Sevastopol after the Crimean port that serves as a headquarters for Russia's Black Sea Fleet.

Incidentally, the Mistral will fill a key missing void in Russia's Black Sea fleet: the ability to launch amphibious assaults on bordering nations, such as Georgia.

The Mistral, which looms over the town, is a potent weapon. The length of more than two football fields, the ship is designed to edge up to a shoreline and deploy more than a dozen tanks and attack helicopters as well as hundreds of troops. This type of ship is also an integral part of the North Atlantic Treaty Organization's defenses, using sensitive communications technology to coordinate operations with other NATO ships. The potential transfer of that technology to Russia has long worried policy makers on both sides of the Atlantic.

The ship also plugs a crucial gap in Russia's armed forces. Moscow boasts one of the world's largest armies and a formidable air force. But Russia's Black Sea fleet lacks an amphibious vessel like the Mistral, capable of launching a land invasion. That weakness deprived Moscow of a crucial knockout punch in 2008, when Russian troops invaded Georgia but never managed to dominate the former Soviet countries shoreline, forcing a stalemate.

"A ship like that would have allowed the Black Sea Fleet to accomplish its mission in 40 minutes,"Russian Navy Admiral Vladimir Vysotkiy said at the time.

Ironically, it was none other than former French president Sarkozy, who had brokered the truce between Russia and Georgia in 2008, who proposed building the ship which would have made Russia's annexation of Georgia a walk in the park.

The proposal to sell France's prized warship to Russia grew out of the Georgian conflict. In October 2008, France's president at the time, Nicolas Sarkozy met with his counterpart President Dmitry Medvedev in the Alpine town of Evian in a bid to shore up a fragile truce Mr. Sarkozy had brokered between Russia and Georgia weeks earlier. By offering to sell Russia the Mistrals, Mr. Sarkozy aimed to persuade the Russians that NATO was no longer an enemy.

Georgian President Mikheil Saakashvili flew to Paris to protest the sale, but Mr. Sarkozy brushed aside his complaints during a tense meeting in the Élysée Palace, according to a French official. "Look Mikheil, Russia is not going to invade Georgia with this boat," Mr. Sarkozy said, according to the official. Mr. Sarkozy then quipped that it was no use worrying about a Russian invasion, because the Russians were "already in your territory."

Years later, the sale has come back to haunt France's government.

And now it is set to haunt the US as well: "Last month, Assistant Secretary for Europe Victoria Nuland told U.S. lawmakers: "We have regularly and consistently expressed our concerns about this sale."

Things are only set to get worse for the State Department once photos of hundreds of "sanctioned" Russian troops being trained by the French hit the front pages of newspapers around the world, in clear defiance of US policy:

French officials haven been poring over the technical details of the training session and deliberating how to temporarily house the Russian troops while they are in French territory without attracting too much attention, said one of the people familiar with the matter.

Russia and France had planned to lodge the troops in a Russian vessel docked in Saint-Nazaire, but the person said French officials are reviewing more discreet options.

Meanwhile it is none other than Putin who continues to have the last laugh, again, and again.

Credit to Zero Hedge