By Derek Bisaccio, Military Markets Analyst, Forecast International.
On June 2, Egypt received the first of its two Mistral helicopter carrier vessels, constructed by French shipbuilder DCNS. The ship, named for Egypt’s late President Gamal Abdel Nasser, is partaking in exercises with the French Navy prior to setting sail for Alexandria.
At the transfer ceremony, Egyptian Minister of Defense Sedky Sobhi said, “We now have advanced capabilities in confronting terrorism within our borders and on our shores.” He added, “[The vessel] increases our combat capabilities and our ability to carry out long-term missions at sea…and we are awaiting the arrival of the second in September.”[i]
When the construction of the ships was first agreed to, Egypt was not the intended recipient. Instead, France planned to sell the vessels to Russia. The two sides agreed to a EUR1.2 billion (then $1.52 billion) contract in June 2011,[ii] which would see France provide Russia with the two Mistral helicopter carriers, named Vladivostok and Sevastopol.
At the time of the initial sale to Russia, the agreement was controversial. In particular, NATO countries were concerned that Russia could obtain access to critical technology after the vessels were completed and delivered. Even so, DCNS moved forward with construction of the ships; Vladivostok was laid down in February 2012 and Sevastopol followed suit in June 2013.
However, the Mistral sale to Russia took a turn for the worse following the crisis in Crimea and the fighting in eastern Ukraine, which began in early 2014 and escalated throughout the year. The transfer of Vladivostok was supposed to occur before the end of 2014, but in September it was put on a temporary hold, pending Russia meeting certain conditions laid out by French President Francois Hollande regarding the situation in Ukraine.[iii]
The suspension was criticized by Moscow,[iv] which had already made a down payment on the ships. Russia warned that failure to complete the contract would result in large penalties. Russian presidential aide Vladimir Kozhin told RIA Novosti in December 2014 that assuming the situation was not resolved, Russia might consider filing a lawsuit with the European Court of Arbitration the following year.[v]
As France debated its options regarding the vessels, NATO continued to oppose the sale. U.S. lawmakers even suggested that the alliance should buy the Mistral vessels in order to deny their transfer to Russia.[vi]
Ultimately, France chose to permanently cancel the deal. The two sides reached a compensation agreement whereby France would refund Russia’s payment of EUR900 million ($1 billion).[vii] France also stripped the vessels of their Russian equipment.
Though the refund settled France’s dispute with Russia and freed up the option of exporting the vessels elsewhere, Paris was in need of a customer. A number of potential customers, including Canada, India, Singapore, the United Arab Emirates, Egypt, and Malaysia, were reportedly interested in buying one or both of the vessels.
On September 23, 2015, Hollande stated that Egypt had agreed to purchase both ships for EUR950 million ($1.1 billion).[viii] According to the French government, Egypt’s purchase included “significant” amounts of financing from Saudi Arabia. Vladivostok was renamed Gamal Abdel Nasser, while Sevastopol was renamed Anwar El Sadat.
Since the conclusion of the deal between Egypt and France, Moscow has played an important role in Cairo’s acquisition of the Mistral helicopter carriers, boosting Russian exports to the Egyptian market.[ix] Russia and Egypt have been in discussions regarding the equipment for the vessels, such as communications and control systems.[x]
Egypt has also ordered 46 Ka-52K naval helicopters from Russia,[xi] some of which will presumably equip its new naval vessels. These helicopters may come with KRET’s President-S onboard defense system, a countermeasure against anti-aircraft weapons. All of the Ka-52Ks will be delivered by the end of 2017.
Even so, with two arms deals signed in 2015 (an agreement for 24 Dassault Rafale fighter jets in addition to the Mistral vessels contract) and a third deal inked earlier this year (worth EUR2 billion [$2.26 billion] and including a military telecommunications satellite),[xii] it is France that is the growing military supplier of choice for Egypt under President Abdel Fattah el-Sisi.
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[i] Reuters, “Egypt receives first of two French Mistral warships,” June 2, 2016. http://www.reuters.com/article/us-france-egypt-deals-idUSKCN0YO1D0
[ii] Reuters, “Russia, France sign Mistral helicopter carrier deal,” June 17, 2011. http://www.reuters.com/article/russia-france-mistral-idUSLDE75G1K520110617
[iii] Francois Hollande, “France sets conditions for Mistrals’ delivery to Russia,” September 5, 2014. http://www.ambafrance-uk.org/Mistral-ship-cannot-yet-be
[iv] Sputnik International, “Russia Appoints Mistral Commander for Transfer of Warship From France,” November 11, 2014. http://sputniknews.com/military/20141121/1014983568.html
[v] Sputnik International, “Russia Expects France to Make Final Decision on Mistral Ships by Year-End,” December 4, 2014. http://sputniknews.com/russia/20141204/1015498101.html
[vi] Cristina Marcos, “Lawmakers urge NATO to buy French warships instead of Russia,” The Hill, November 6, 2014. http://thehill.com/blogs/floor-action/house/223178-lawmakers-urge-nato-to-buy-french-warships-instead-of-russia
[viii] Agence France-Presse, “France Says Egypt To Buy Mistral Warships,” September 23, 2015. http://www.defensenews.com/story/defense-news/2015/09/23/france-says-egypt-buy-mistral-warships/72667012/
[ix] Oscar Nkala, “Russia confirms Egypt as North African buyer of 50 MiG-29s,” April 8, 2016. http://www.defenceweb.co.za/index.php?option=com_content&view=article&id=43029:russian-confirms-egypt-as-north-african-buyer-of-50-mig-29s&catid=35:Aerospace&Itemid=107
[xi] Oscar Nkala, “Egyptian Navy to Receive 46 Ka-52K Naval Helicopters from Russia,” Defense News, January 1, 2016. http://www.defensenews.com/story/defense/naval/naval-aviation/2016/01/01/russia-supply-egyptian-navy-with-46-ka-52k-helicopters/78182410/
[xii] Reuters, “France inks deals worth $2 billion with Egypt,” April 19, 2016. http://english.alarabiya.net/en/News/middle-east/2016/04/19/France-signed-2-26-bln-dollar-deals-with-Egypt.html