Posts tagged ‘World’

August 2, 2014

Brits Say Putin Shows NATO Is Useless

Brits Say Putin Shows NATO Is Useless

June 24, 2014

Laos stuggles to meet vaccin goals

Steve Finch, Vientiane, Laos

June 23, 2014

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Vientiane, Laos has one of the highest economic growth rates in the region in recent years – about eight percent — but it also has a budget shortfall. That means many state workers including doctors and nurses also haven’t been paid in months.

Amid the ongoing fiscal crisis, aid workers were concerned the government wouldn’t meet a sharply rising financial commitment to fund patchy, but improving immunization coverage. In the absence of a local commitment, there was concern international donors would cry foul, potentially threatening the country’s vaccination program.

Then on May 12, UNICEF reported that Laos had deposited the requisite $530 000, confirming the landlocked Southeast Asian state’s small commitment to the program, which totaled US$7.9 million in 2014. The government’s commitment has placated foreign donors, guaranteeing coverage for the majority of the country’s nearly seven million people.

“In light of the fiscal situation, it is encouraging that the government of Laos is continuing to commit its financial resources to high impact and life-saving interventions for children, such as immunization,” said Julia Rees, acting head of UNICEF’s Laos office, the procurer of vaccines for the country.

In at least one province, local authorities had already asked an international health nongovernmental organization to help fund immunization efforts.

Dr. Soulivanh Pholsena, director of foreign relations at the Laos Ministry of Health, did not respond to questions on the country’s vaccination program.

Laos aims to graduate from least developed country status by 2020 — the first country in the world to state such an ambition — which will mean lowering donor funding. To that aim, the government has been asked to contribute sharply rising annual payments towards routine vaccines. It started funding them in 2012 with a payment of just $22 400.

“Over time, countries take on an increasing share of vaccine costs so that — when the time is right — they are ready to assume the full costs of financing their vaccine programs,” said Rob Kelly, a spokesman of GAVI Alliance, which has disbursed US$19.3 million since 2000 as one of the biggest funders of immunization in Laos.

Although a new real-time, digital vaccine supply system that tracks cold storage and delivery to patients was introduced this year and major progress has been made recently, many people in remote areas still do not receive routine vaccinations.

Laos has increased coverage for measles from just 40% of the population in 2007 to 82% last year, according to the national statistics bureau. But in four provinces, still less than a quarter of babies at the critical age of 12 to 23 months are immunized against the disease.

While the mortality rate for under-fives has reduced much faster than expected, studies by the University of Washington this month did not include Laos on a list of countries expected to achieve the UN Millennium Development Goal for reducing child mortality.

Viorica Berdaga, head of health and nutrition at UNICEF Laos, said there was still every chance of reducing under-five deaths by two-thirds to meet MDG4 in time for next year.

“To maintain this pace the government of Laos should continue to increase its resources for the delivery of child survival interventions to those who are hardest to reach,” she said.


June 23, 2014

ASEAN As A Single Market: What, When, How, And Really?

ASEAN As A Single Market: What, When, How, And Really?

Jun. 22, 2014 9:17 AM ET  |  Includes: ASEA

By Laurel Teo, CFA

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Are you eyeing investments in Asia, but tired of the usual “China,” “India” options? Tempted to investigate an exciting growth region somewhere south of the former and east of the latter?

The 10 countries that make up the Association of Southeast Asian Nations (ASEAN) are now moving towards economic integration. First announced more than 10 years ago, the ASEAN Economic Community (AEC) is due to be established by 2015.

With less than a year left to the official deadline, there’s been a revival of interest in this potential unified market comprising a diverse mix of nascent frontier markets (Laos, Cambodia, and Myanmar), rising economies (Indonesia, the Philippines, and Vietnam), established markets (Thailand and Malaysia), and wealthier states (Brunei and Singapore). News media, research outfits, and even industry conferences are beginning to flirt with the theme.

A recent report by McKinsey (Understanding ASEAN: Seven things you need to know) highlights some key attractions of ASEAN as a collective market:

  • Combined GDP of $2.4 trillion in 2013, making it the seventh-largest economy in the world if it were a country. Projected to be fourth largest by 2050.
  • Population of 600 million, ahead of North America or the European Union. Labour force is third largest in the world, behind only China and India.
  • Almost 60% of total growth since 1990 has been derived from productivity gains.
  • ASEAN’s five key members (Indonesia, Malaysia, the Philippines, Singapore, and Thailand) together pulled in more foreign direct investments than China in 2013 ($128 billion vs $117 billion)

Those of us from the investment and financial industry may be drawn to a specific section of the AEC Blueprint focusing on capital markets. When implemented, the measures proposed will ensure that within ASEAN:

  • Capital can move freely across borders.
  • Issuers are free to raise capital anywhere.
  • Investors can invest anywhere.

Theoretically, investors should be able to trade capital market products freely in any ASEAN market from a single access point, while capital market intermediaries should be able to provide services throughout the region, based on home country approval.

Too good to be true? Possibly. While the plans and priorities have been approved by the respective governments, the devil is always in the details – in this instance, the speed and extent of implementation.

There is a host of initiatives and actions outlined in the AEC Blueprint, divided into four broad areas, targeted to be phased in over eight years (2008 to 2015). However, the general consensus by observers and ASEAN watchers is that a full integration will not happen by the end of 2015.

That’s not to say that progress hasn’t been made.

To monitor the AEC process, ASEAN set up an AEC Scorecard, tracking implementation in four phases (2008-2009, 2010-2011, 2012-2013, and 2014-2015). Reports for the first two phases (2008-2011) have been published.

So far, ASEAN has scored best in terms of integrating the region into the global economy (namely creating free-trade agreements, or FTAs, between ASEAN and other major economies, e.g. China, India, Japan, Korea, Australia, and New Zealand). More than eight in 10 (85.7%) measures in this area targeted for the first two phases have been achieved.

However, when it comes to promoting a single market and production base, such as free flow of investment and freer flow of capital, only slightly under two-thirds (65.9%) of the targeted initiatives for this period (2008-2011) have been accomplished. The pace in this area has also slowed. Where almost all of the single-market initiatives in Phase 1 (93.8%) were on track, the pace had halved (49.1%) by the end of Phase 2.

What does this mean? While investors and business people should not hold their breath for full integration come 2015, they can and should expect pockets and even swathes of areas where capital, services, and goods begin to flow more freely. Those ASEAN members that are better prepared will kick-start the initiatives, with the circle widening as and when other member economies are ready to join.

This accretive approach is typical of ASEAN, going by historical precedents (not only of the AEC thus far, but also most other earlier cooperation efforts).

In the case of the AEC, a trading link allowing investors to connect to and trade on other exchanges in the region went “live” with just the Malaysia and Singapore bourses in September 2012; Thailand joined shortly after. Vietnam, Indonesia, and the Philippines have agreed to the scheme in principle, but delayed coming on board, pending technology upgrades and other practical concerns.

Likewise, the ASEAN funds passport scheme is scheduled to go live this year with three core members: Malaysia, Singapore, and Thailand. Known officially as the ASEAN Collective Investment Schemes (CIS) Framework, it will allow fund managers operating in one market to offer CIS (typically mutual funds or unit trusts) directly to retail investors in the other two member markets. All members will adopt a set of common standards in areas such as qualifications, investment limits, and capital requirements for instance, to ensure that retail funds are managed based on industry best practices.

And even though it’s just three markets to start with, the trio’s combined assets under management (AUM) is still a sizeable chunk – $240 billion at the end of 2012 – sufficiently attractive to warrant the interest of the investment industry.

An internal projection by BNP Paribas Securities Services reckons that the AUM could reasonably grow between 33% (to $317 billion) and 70% (to $400 billion) over the next five years, depending on the impact of ASEAN passporting on funds growth.

The projection, discussed in a recent report in Asian Investor (“Exploring the Asean fund passport’s potential”), further considers a scenario with Indonesia and the Philippines joining. This could expand AUM to $470 billion in the same period.

So even with partial integration, there are still benefits to be reaped. As BNP Paribas Securities Services Senior Executive Mostapha Tahiri put it in the report: “As Malaysia and Thailand are relatively closed fund markets, the passport gives local and global players immediate benefits from cross border distribution.”

A potential stumbling block, however, could be the simple fact that outside of governments, a vast majority of the private sector remains unaware or unconvinced about the AEC and its merits, if any.

Consider this particularly telling episode at the inaugural ASEAN Economic Congress, a new conference organized earlier this year by Euromoney on the AEC.

A panelist threw out this question to the 400-plus delegates in the hall: “How many of you have seriously thought about what the AEC means to your business? Is anyone’s company preparing for how business is going to change? Has anyone received any company training about the AEC?”

Not a single hand was raised. Clearly, people were either completely oblivious to the AEC, or completely skeptical that the AEC will make any difference, the panelist observed wryly.

A more scientific assessment in 2012 had indicated as much. The ASEAN Economic Community Business Survey polled 381 firms from nine of the 10 ASEAN countries and found that more than half (55%) were unaware of the AEC 2015. In contrast, more than two-thirds of the same sample knew about the ASEAN FTA with China. In fact, a consistently higher proportion was aware of other ASEAN free-trade agreements (with India, Korea, and Australia and New Zealand) compared to the AEC.

Based on responses to a number of other questions, the report by National University of Singapore economics don Albert Hu concluded:

“… what drives the business community’s interest in AEC 2015 is the actual process of economic integration. We can infer from this that the lack of awareness of AEC 2015 in the business community can be attributed to the lack of actual economic integration.”

A 2013 Deutsche Bank report on the AEC came to a similar view. “Thus far, the public impression of AEC is that it is driven by the government sector, which needs to be corrected …. AEC success depends crucially on private-sector involvement and public support. In this regard, greater efforts should be made to raise awareness of AEC among the business community to bring it on board,” it said.

Indeed, implementation does not equal integration. The ASEAN governments can only open doors, clear trade barriers, and prepare the infrastructure. This would only be an empty frame, however, without the private sector’s buy-in and involvement.

The next step for ASEAN governments thus would be to pitch, nay evangelise, the vision. Any takers?

Disclaimer: Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.


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June 5, 2014

Ukraine crisis: Russia must engage with Kiev, says G7

BBC News Europe


Ukraine crisis: Russia must engage with Kiev, says G7

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Barack Obama: “If Russia’s provocation continues, the G7 nations are ready to impose additional costs”

Leaders of the G7 industrial nations have urged Russia to begin talks with the new leadership in Kiev to end the crisis in eastern Ukraine.

US President Barack Obama and UK PM David Cameron said Moscow must recognise Petro Poroshenko, who takes office as president on Saturday.

The G7 leaders meeting in Brussels said they were fully behind Mr Poroshenko.

Later in Paris Mr Cameron met Russian President Vladimir Putin, giving him a “very clear and firm set of messages”.

The two leaders met in a customs area of the French capital’s Charles de Gaulle airport.

This was Mr Putin’s first face-to-face meeting with a Western leader since the Ukraine crisis began.

“The status quo, the situation today, is not acceptable and it needs to change,” Mr Cameron said.

“We need the Russians to properly recognise and work with this new president. We need de-escalation, we need to stop arms and people crossing the border. We need action on these fronts.”

Mr Putin later met French President Francois Hollande for dinner, but according to Russian media no announcements were made after the meeting. Mr Hollande was to see Mr Obama for a separate meal.


Analysis Hugh Schofield, BBC News, Paris

Desperate not to offend either of his mutually loathing invitees, the French president has taken the unusual step of agreeing to eat two meals in one evening.

First he dines on Thursday night at the Chiberta restaurant – just by the Arc de Triomphe – with President Obama.

Then – after presumably toying with his Michelin-starred plat and definitely not ordering the cheese – he returns to the Elysee for what they are calling “supper” with Vladimir Putin.

It is an unusual situation for a head of state – a reminder perhaps of the lengths Mr Hollande is prepared to go to make these two days a success.

When you are as unpopular at home as the president is, a big international shindig can come as a lifesaver. And shindigs rarely come as big as this one.

Hollande’s double dinner date dilemma


Mr Putin has not ruled out a meeting with Mr Poroshenko at a ceremony to mark the 70th anniversary of the D-Day landings in Normandy on Friday.

No talks are planned between Mr Putin and Mr Obama, who will also be at the ceremony.

Meanwhile, fighting continued in eastern Ukraine, with reports of an attack on a border post in Donetsk region.

A convoy of vehicles carrying pro-Russian separatists was involved in the attack near the Marynivka checkpoint which has now been repelled by government forces, the Ukrainian border guard service said.

The attack comes a day after rebels seized a border guard base in neighbouring Luhansk region after days of combat.

‘Resolute message’

Speaking at a news conference in Brussels with Mr Cameron, Mr Obama said Russia should “seize the opportunity” provided by the change of leadership in Kiev, and be prepared to face sanctions if the situation continued to deteriorate.

“Russia needs to recognise that President-elect Poroshenko is the legitimately elected leader of Ukraine and engage the government in Kiev,” he said.

“Given its influence over the militants in Ukraine, Russia continues to have a responsibility to convince them to end their violence, lay down their weapons and enter into a dialogue with the Ukrainian government.

“On the other hand, if Russia’s provocations continue, it’s clear from our discussion here that the G7 nations are ready to impose additional costs on Russia.”

Francois Hollande meets Vladimir Putin in Paris - 5 June
Presidents Hollande is having the second of his two dinners with Mr Putin
Vladimir Putin and David Cameron in Paris - 5 June
Mr Cameron urged Mr Putin to take action to end the status quo in eastern Ukraine
G7 leaders in Brussels (5 June 2014)
G7 leaders said they were sending a “resolute message “to Russia

Earlier, German Chancellor Angela Merkel said that the G7 leaders had “exchanged expectations” about Ukraine and Russia.

“On substance, there is no difference whatsoever,” she said. “There is great common ground.”

European Commission President Jose Manuel Barroso said the group was united in sending a “resolute message” to Russia, that it should “recognise and fully engage with” the new Ukrainian authorities.

He added that Russia should “take concrete and credible measures to de-escalate the situation in the east of Ukraine”.


Barroso: “This democratic club… does not accept the Russia of Vladimir Putin”

The G7 summit is the first since Russia was expelled from the group following its annexation of Crimea in March.

On Thursday, leaders also discussed the global economic outlook, climate change and development issues.


June 5, 2014

Obama warns France on Russia Mistral ship deal

BBC News Europe


Obama warns France on Russia Mistral ship deal

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Demonstrator against Vladivostok warship at St Nazaire (1 June)
The Vladivostok (pictured) is due to be delivered to Russia later this year

President Barack Obama has said he has told France of his concerns about the sale of two warships to Russia in the light of the crisis in Ukraine.

The first carrier is due for delivery this year in a 1.2bn euro (£1bn; $1.6bn) deal signed in 2011.

Mr Obama said while he recognized it was a big deal and important for French jobs, “I think it would have been preferable to press the pause button”.

Paris says it will not halt the deal unless further EU sanctions are agreed.

A foreign ministry spokesman said a contract had been signed and had to be honored.

Russian President Vladimir Putin, who is among some 18 international leaders taking part in D-Day landings commemorations in France, has said he expects Paris to go through with the warship deal.

“We’re open, I would say even ready eventually, to signing new orders if our French partners wish to carry on this co-operation,” he told French TV.

But President Francois Hollande has come under sustained pressure from European allies over the Mistral-class helicopter carriers which are set to be delivered to the Black Sea ports in Crimea, annexed by Russia in March.

Mistral-class helicopter carrier Sevastopol at a shipyard in St Nazaire (May 2014)
The Sevastopol is set to be delivered in 2015

Polish Foreign Minister Radek Sikorski has also called on France to cancel the deal because “Russian generals have already said what these ships will be used for: to threaten Russia’s neighbours in the Black Sea and that means Europe’s partners.”

One of the ships is called the Sevastopol, named after the Russian port in Crimea. French media describe the Mistral-class carriers as the “pride of the navy” and Russia’s navy chief has described them as significantly enhancing its combat potential.

Although sanctions and asset freezes have been imposed on Russia by the European Union, US and others since the annexation of Crimea, further measures are being considered.



U.S. Lawmakers Want France to Sell Russian-Ordered Warships to NATO

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Rama / WikicommonsWashington and some European partners have been urging Paris to reconsider its supply of helicopter-carrier ships to Moscow.

U.S. lawmakers have urged France to cancel the sale of two advanced helicopter-carrier ships to Russia and suggested that NATO buy or lease them instead.

The purchase would send a strong signal to Russian President Vladimir Putin that “the NATO allies will not tolerate or in any way enable his reckless moves,” they said in a letter to NATO Secretary-General Anders Fogh Rasmussen.

Washington and some European partners have been urging Paris to reconsider its supply of high-tech military hardware to Moscow following Russian action in Ukraine, including its annexation of the Crimean peninsula in March.

Purchasing the ships would also enhance NATO’s capabilities at a time when many members have been cutting defense expenditures, and reassure NATO partners in Central and Eastern Europe, the lawmakers said.

Signatories of the letter included Eliot Engel, the top Democrat on the House of Representatives Foreign Affairs Committee, and the chairman of the U.S. delegation to the NATO Parliamentary Assembly, Michael Turner.

France has said it would press ahead with the deal because canceling would do more damage to Paris than to Moscow. The contract, worth $1.66 billion, has created about 1,000 jobs and includes the option for two more of the advanced vessels.

Four other U.S. lawmakers wrote to Obama earlier this month urging him to oppose the sale of the Mistral ships, which can carry 16 helicopters, four landing craft, 60 armored vehicles, 13 tanks and up to 700 soldiers.

A spokesman for Democratic U.S. Senator Mark Warner, who signed that letter, said he was unaware of any response.

The 2011 French sale was Moscow’s first major foreign arms purchase in the two decades since the fall of the Soviet Union. Former French President Nicolas Sarkozy had hailed the signing of the Mistral contract as evidence the Cold War was over.

The first carrier, the Vladivostok, is due to be delivered by the last quarter of 2014. The second, to be delivered by 2016, is named Sebastopol, after the Crimean seaport.

See also:
Russia Tells France to Deliver Warships or Return Money



France Moves to Defy Allies on Sale of Warship to Russia

France Is Preparing to Train Hundreds of Russian Seamen Aboard a Powerful French-Made Warship This Month

France is preparing to train hundreds of Russian sailors to operate a powerful French-made warship this month, defying calls from the U.S. and other Western allies to keep the vessel out of the Kremlin’s hands. WSJ’s Grainne McCarthy joins the News Hub with more on this. Photo: AFP/Getty

PARIS—France is preparing to train hundreds of Russian seamen to operate a powerful French-made warship this month, defying calls from the U.S. and other Western allies to keep the vessel out of the Kremlin’s hands, people familiar with the matter say.

More than 400 Russian sailors are scheduled to arrive on June 22 in the French Atlantic port of Saint-Nazaire to undergo months of instruction before piloting the first of two Mistral-class carriers back to Russia in the fall, said one of these people.

The training is a pivotal step that deepens France’s commitment to fulfilling the $1.6 billion contract to supply Russia with the carriers, which are built to launch amphibious attacks.

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.

The contract loomed large as President Barack Obama convened a Group of Seven summit in Brussels—a forum intended to exclude Russian President Vladimir Putin from the table of world leaders.

French officials say Mr. Hollande is expected to discuss the contract with Mr. Obama when the leaders meet for dinner in Paris on Thursday, the eve of D-Day commemorations on Normandy’s beaches. The French leader has also scheduled a second—and separate—dinner that evening with Mr. Putin.

Franco-U.S. tensions are already on the menu: Mr. Hollande on Wednesday expressed outrage over the U.S. investigation into BNP Paribas SA, BNP.FR -0.04% which is potentially facing fines of over $10 billion for breach of U.S. sanctions.

Paris insists the training doesn’t tie its hands and that it won’t make a final decision on the ship’s 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.

For months, France’s planned sale has faced staunch opposition from the Obama administration and other Western governments including the U.K. and Poland—criticism that has grown in the wake of Russia’s annexation of Ukraine’s breakaway Crimea region.

“We have said that given the current context it’s not the right timing for those types of transactions to move forward,” said Ben Rhodes, a senior White House official who accompanied Mr. Obama to the G-7 meeting. “We ourselves have put restrictions on certain high-tech materials that could go toward the Russian defense industry.”

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 actions in Ukraine. Russian natural gas powers homes and businesses across Germany, the EU’s biggest economy, while Russian oligarchs store their fortunes in U.K. banks.

Wednesday’s G-7 was convened without Mr. Putin in an attempt to isolate him on the world stage. But Western diplomats gathering in Brussels say there are some signs Russia may be easing pressure on Ukraine following the May 25 presidential election. That has triggered a fresh debate in Europe and the U.S. about whether to ratchet up sanctions.

The G-7 will make clear that “further sanctions are available” if Mr. Putin doesn’t take steps to calm tensions, German Chancellor Angela Merkel said as she arrived for the meeting.

France, hobbled by decades of deindustrialization 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 that 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 1,000 jobs are at stake, in a nation with more than 10% unemployment and a stalled economy.

Mr. Hollande said France was committed to delivering the contract but would re-examine it in October.

“If the contract was interrupted there would be a reimbursement,” he said. “There is no reason to enter into that process.”

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.

Asked Wednesday about France’s training plans, Mr. Putin said he expected the French to “fulfill their contractual obligations” and dangled the possibility of new contracts for the country. “If all goes as we agreed, we don’t exclude new orders—not necessarily in naval ships—but perhaps in other areas,” Mr. Putin told French TV.

A man in Saint-Nazaire with Ukrainian flags protests the warships sale. Agence France-Presse/Getty Images

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 country’s 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 Vysotskiy said at the time.

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 Russian 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.

Western diplomats huddled in Vienna to devise a response to Russia’s annexation of Crimea in March. There, a French diplomat recalled how a Canadian colleague cornered him with a question: “Is France going to cancel the sale of those warships to Russia?”

Last month, Assistant Secretary for Europe Victoria Nuland told U.S. lawmakers: “We have regularly and consistently expressed our concerns about this sale.”

French officials, meanwhile, 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.

The Russian navymen crews are scheduled to sail for France on June 18 on the Smolnyi, a Soviet-era training ship, said Vyacheslav Davydenko, spokesman for Rosoboronexport, the Russian state arms company that is the formal buyer of the ships. Officers for the Mistrals have already arrived in France to begin training on the new ships ahead of the sailors, according to Russian state media.

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

Corrections & Amplifications
The name of Russian Navy Admiral Vladimir Vysotskiy was misspelled as Vysotkiy in an earlier version of this article.

—Carol E. Lee, Gregory L. White and William Horobin contributed to this article.

Write to Stacy Meichtry at


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