France and Russia have come to an agreement voiding the contract under which France would sell two Mistral-class helicopter carriers to Russia. The canceling of the sale is a humiliating defeat for Paris and for the French military-industrial complex.

The failed attempt to sell the Mistral ships to Russia points to the escalating NATO drive to isolate and surround Russia, and deep contradictions undermining French foreign policy. When French President Nicolas Sarkozy signed the contract with then-Russian President Dmitri Medvedev, Paris was seeking to deepen its economic collaboration with Russia to counteract Berlin. However, Paris had also rejoined NATO in 2009 and thus aligned itself on US and German foreign policy.

In 2014, after the putsch led by Washington and Berlin in Ukraine, NATO mounted a military escalation in Eastern Europe aimed at Russia, and France’s allies pushed for the canceling of the sale of the Mistral warships. The current decision puts an end to longstanding internal battles in diplomatic and government circles over the contract.

Last week, Vladimir Kojin, a military and technical adviser to the Russian presidency, declared that “these talks are already over, everything has already been decided, including the timeframe and the sum of money” that France will pay Moscow to repay it for the non-delivery of the warships.

French Prime Minister Manuel Valls did not deny these remarks, declaring: “We will have the opportunity to make statements in the coming days, in the coming weeks, and decisions on this subject will be taken by the end of the summer.”

Last November, François Hollande decided on the postponement “until otherwise decided” of the delivery of the Vladivostok, one of the Mistral warships, citing Russia’s role in the Ukrainian conflict. The Vladivostok was to be delivered to Russia in November 2014, while the second, the Sebastopol, was due for delivery in autumn 2015. After the cancellation of the helicopter carrier sales to Russia, jobs in the St Nazaire shipyards where the two ships were being built are under threat.

The Russian newspaper Kommersant cited several anonymous sources who indicated that France would pay €1.6 billion to Russia. French defense contractors fear that the cancellation of the contract will undermine their credibility in the struggle for markets and weapons sales now being waged across the world.

The consequences of the cancellation of the sale have already been felt, with India deciding not to purchase Rafale fighter jets from France.

According to Xavier Tytelman, a former French pilot, “The fact that France is not keeping its word on the Mistral ships will have a geopolitical impact on the weapons sales. A country that purchases weapons expects that it will be able to acquire them, whatever stakes and geopolitical events come up in the meantime.”

Alongside the other imperialist powers inside NATO, France is carrying out a military escalation towards war with Russia since Washington and Berlin orchestrated a putsch in Ukraine to weaken Russia in eastern Europe and encircle it militarily. The cancellation of the helicopter-carrier sales underscores the rapid worsening of Franco-Russian relations.

France has joined military exercises organized by NATO across Europe, whose goal is to prepare a military confrontation with Russia in the Baltic region or other Eastern European countries. France is also supporting economic sanctions against Russia. Last May, France sent eight Mirage-2000 fighter jets for the Arctic Challenge military exercise, in which patrol missions and simulated aerial attacks were organized.

From June 5 to 15, NATO carried out aerial and naval exercises mobilizing over 5,000 people and nearly 50 warships drawn from the navies of 17 member states. These exercises aimed to boost anti-submarine, anti-air, and anti-surface ship capabilities, as well as practice amphibious landings.

As the St Petersburg Economic Forum took place, the French courts froze large quantities of Russian financial assets in France, in line with a ruling in The Hague.

Sections of the French armed forces reportedly backed the cancellation of the sale, fearing that it would reinforce a potentially hostile country. These warships reportedly have significant capabilities, with Russian Admiral Vladimir Vyssotsk telling the Russian newspaper Nezavisimaya Gazeta: “With Mistral-type warships during the South Ossetia conflict, the Russian army could have accomplished all its missions in 40 minutes instead of 26 hours.”

France also came under pressure from its NATO allies, including the United States and Germany, who were asking France not to deliver the ships. The criticisms by US officials of the delivery of warships from a NATO member state to Russia did not pose an obstacle to close military collaboration between the United States and France, however.

Speaking to the US Congress at the beginning of May, Assistant Secretary of State for European and Eurasian Affairs, Victoria Nuland, said that the Obama administration had consistently raised objections to the Mistral sale with French officials.