On 23 July 2010, French President Nicolas Sarkozy announced to the French-Korean STX shipyard workers at
Saint-Nazaire (France) that "you are going to build two Mistral-type vessels for Russia".

Two more Mistral are likely to be built in Russia under French license.

The Mistral is a highly sophisticated BPC-type projection and command vessel, which is however unsuitable for
both French and Russian needs. Indeed, their distinctive feature is the capability of carrying two LCAC
hovercraft, used by the U.S. Marine Corps, but which neither France nor Russia possess.

According to the French President, the deal was Dmitry Medvedev’s idea, his Russian counterpart, but the
"details" are still being settled. In other words, the contract has not yet been signed.

In Moscow, the announcement deeply irked Vladimir Putin. The Prime Minister had tried to intervene in the
transaction and designated his deputy Igor Sechin to oversee the negotiations. In fact, his mission was to
torpedo the transaction envisioned by the Russian and French Presidents. Sechin was backed, in the first
place, by the Russian Joint Chiefs of Staff whose acquisition budgets have been severely trimmed and for whom
the Mistral vessels are far from being a priority. He also drew support from OSK (Объединённая судостроительная
корпорация), the state conglomerate that he chairs and which is clearly not keen to relinquish its monopoly
over Russian military shipbuilding.

According to well-informed Moscow sources, Mr. Medvedev arranged with Mr. Sarkozy to cash in on sizable
commissions and under-the-counter payments (reaching 8% of the overall sale price). In this way, Medvedev would be able to finance his forthcoming electoral campaign against "his friend of thirty years" and henceforth rival Vladimir Putin. As for Mr. Sarkozy, he would be in a position to fund his re-election.

The DCNS management, a naval defence company based in France and one of Europe’s leading shipbuilders, has in
recent years been implicated in various corruption scandals: the sale of warships to Taiwan, to Saudi Arabia
("Sawari") as well as the sale of submarines to Pakistan yielded commissions and kickbacks profiting political
figures whose identity was never disclosed. The names of Nicolas Sardozy and former French Prime
Minister Edouard Balladur were mentioned in the context of all three incidents but no sound evidence was presented.