France is withholding the delivery of the first of two warships it agreed to build and sell to Russia, citing the Russian aggression in eastern Ukraine.
The two countries struck a deal worth about $1.6 billion in 2011 for two Mistral-class warships, under which France would deliver the first in October.
But with Russia refusing calls to remove its forces from Ukraine, the office of French President Francois Hollande now says the "conditions" aren't right for a delivery, according to Agence France-Presse.
The president of the Republic declared that, despite the prospect of a ceasefire which still remains to be confirmed and implemented, the conditions for France to deliver the first warship are not to date in place."
The statement was issued on the eve of a major NATO summit, and it came as President Obama tries to mobilize a united front among alliance members against Vladimir Putin.
Hollande's office said Russia's actions "go against the foundations of Europe's security." AFP noted that Obama had voiced concerns about the France-Russia deal for the warships and said the countries should "hit the pause button" on the trade.