The German government has rejected calls by France and Italy to finance a proposed €5-billion ($5.3 billion) E.U. defense fund through new debt, according to a government positioning paper obtained by Handelsblatt.
In the paper, Berlin says financing the fund with bonds would “contradict the fundamentals of good budget management and is therefore not a viable option for financing European defense efforts.”
The German government also says it is unacceptable to classify national contributions to the fund as “one-time measures” that would be exempt from the E.U. stability and growth pact, which requires member states to keep their budget deficits at or below three percent of economic output.
The European Commission proposed the defense fund in November as a way to increase cooperation, save money and streamline the procurement of arms and other defense systems within the European Union.
Continue reading: the European Commission’s proposal