France on Tuesday inked a lucrative agreement to sell four Mistral warships to Moscow, with two to be built in Russia, in a move bitterly opposed by ex-Soviet states in the Baltics.
The deal for the amphibious assault ships will be the first sale to Russia of such technology by a NATO country.
France's NATO allies -- in particular Lithuania, Latvia and Estonia -- have expressed concern about arming Russia with modern Western weaponry.
Leaked diplomatic cables showed that US Defence Secretary Robert Gates also raised Washington's concerns while on a visit to Paris last year.
The deal was announced while President Nicolas Sarkozy was visiting the STX naval shipyards in the western port of Saint-Nazaire where the vessels will be built in partnership with France's state-owned military contractor DCNS.
"The governments of the two countries agree to give their full support to the construction of two (warships) in France and two in Russia," said a joint French-Russian statement released by the French presidency.
Sarkozy told shipworkers in Saint-Nazaire that the deal represented six million hours of work and 1,500 jobs over four years.
A previous deal announced late last month concerned the construction of two Mistrals in Saint-Nazaire and mentioned the possibility of building two more.
The deal unveiled Tuesday did not mention how much technology France would transfer to the Russians to enable them to build the ships, nor did it mention how much the ships were being sold for.
France has been negotiating with Russia since 2009 on the deal to sell Moscow the Mistral, which is priced at around 500 million euros (680 million dollars).
Russian state shipbuilder OSK boss Roman Trotsenko told Interfax news agency that the unit price agreed was "less than 600 million euros."
STX shipbuilder said the first Mistral would be delivered in December 2013 and would be 80 percent built in France and 20 percent in Russia.
A Mistral-class ship can carry up to 16 helicopters, four landing craft, 13 battle tanks, around 100 other vehicles and a 450-strong force. It has facilities for a full command staff and is equipped with a 69-bed hospital.
The Russian army has said such a ship would have helped it win its August 2008 war with ex-Soviet neighbour Georgia within hours rather than days.
Lithuania, Latvia and Estonia -- states ruled by Moscow until 1991 -- have repeatedly criticised France's plans since Paris began negotiating the warship sale.
The Kremlin only withdrew its troops from their territory in 1994, three years after they won independence when the communist bloc collapsed.
The three states, with a combined population of 6.8 million, still have rocky relations with Russia, notably since they joined NATO and the European Union in 2004.
Senior Republican US Senator John McCain sharply condemned the sale of the four warships, calling it "a threat to some of America's friends and NATO allies."
"I strongly oppose France's sale of the Mistral to Russia," he said.
"This ship is a threat to some of America's friends and NATO allies, and I worry that this decision could set a troubling precedent within NATO of advanced weapons sales to the Russian government," said McCain.
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