French Defense Minister Alain Juppe and Russian Deputy Prime Minister Igor Sechin signed the deal Tuesday in the western French city of Saint Nazaire. French President Nicolas Sarkozy was also present.

The ships will be able to carry helicopters and armored vehicles, allowing Russia to land hundreds of troops quickly on foreign soil. Sarkozy said two ships will be built in France and two others in Russia.

When the deal was initially announced in December, officials said Russia had agreed to buy at least two Mistral-class ships, which cost about euro400 million to euro500 million ($525 million to $655 million) each. French companies DCNS and STX and Russia's OSK are to build the ships.

U.S. Defense Secretary Robert Gates has raised concerns that the deal would send the wrong message to U.S. allies in central and eastern Europe. U.S. diplomatic cables leaked by WikiLeaks revealed the depth of tensions the plans provoked between Washington and Paris.

The plan has also alarmed human rights activists and Georgia, which fought a brief war against Russia in 2008, as well as the ex-Soviet Baltic nations in NATO worried about Russia's sway over its neighbors.

"This project is the largest ever realized by Russia and by a Western company in this field," a statement from Sarkozy's office said, adding that the deal will "open up new horizons on cooperation between France and Russia."