PARIS - France suspended Wednesday the delivery of the first of two Mistral-class warships to Russia "until November" after fierce criticism from its allies given the crisis in Ukraine.
Paris agreed in 2011 to build and sell the two advanced helicopter assault ships to Russia for a total of 1.2 billion euros (S$2 billion), with the first scheduled for delivery in October or November and the second in 2015.
French leaders had refused to back down on a sale seen as crucial to a country suffering from stagnant growth and record unemployment, despite widespread condemnation due to Russia's involvement in the Ukraine crisis.
"The President of the Republic declared that, despite the prospect of a ceasefire, the conditions for France to deliver the first warship are not to date in place," Francois Hollande's office announced Wednesday, on the eve of a major NATO summit in Wales.
The statement came just hours after Russian President Vladimir Putin raised hope of an end to the four-month war in the former Soviet republic, calling on pro-Kremlin rebels and government forces to cease fire and agree to the broad terms of a truce.
The situation in Ukraine is "serious... the actions taken recently by Russia in eastern Ukraine go against the foundations of Europe's security," said the French statement, issued after a meeting of the country's defence council.
However, a French diplomatic source told AFP that the contract is only suspended until November - when the delivery was due.
"At that date we will see what the financial consequences are," the source said, adding that the suspension of the deal "could cost us one billion euros".
Hollande had acknowledged that France might row back on the Mistral deal in a recent interview in French daily Le Monde, before widespread accusations that Russia had sent troops into eastern Ukraine.
"If there was additional tension, and it was impossible to find a way out, we would have to think about it," he said.