France will go ahead and sell a warship to Russia, despite calls for the European Union to impose an arms embargo on the country accused of supporting separatist rebels in Ukraine.

French President Francois Hollande confirmed the sale would go ahead as EU foreign ministers prepared to discuss toughening sanctions against Russia in the wake of the Malaysia Airlines flight MH17 tragedy.

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The EU decided on Tuesday to impose new sanctions against Russia, but the measures, which include travel bans and asset freezes,  have limited impact because they target only Russian officials and individuals close to President Vladimir Putin, and do not affect economic relations. 

Defending the €1.1 billion warship deal, Hollande said the contract was not covered by the new sanctions because it was finalized under the government of former president Nicolas Zarkozy in 2011. 

The French leader added that the Russians have already made payments, and canceling the deal would require France to reimburse them even without delivery of the vessels. 

Under the terms of the sale, France will supply two Mistral-class warships to Russia. 

Hollanden said the first Mistral was nearly finished and would be delivered in October. 

However, in what is seen as a concession to opponents of the deal, Hollanden said delivery of the second Mistral would depend on Moscow's attitude to the conflict in Ukraine, where pro-Russia rebels are accused of shooting down Malaysia Airlines Flight MH17, killing all 298 people on board.

Criticizing France over the sale, British Prime Minister David Cameron said if the UK were in France's position, going ahead with such a contract would be "unthinkable."

Cameron supports tougher sanctions against Russia, including blocking arms sales to the country.

He said the sanctions should send a message to Russia that it cannot continue doing business as usual unless it changed its ways.

Lithuanian President Dalia Grybauskaite has warned that unless military sales to Russia are stopped, "values and security are undermined for the sake of business." 

TagsRussia sanctions, Francois Hollande, david cameron