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Europe   The basic principles of good budget practices

Germany, Italy and France at odds over EU defense fund

Germany armyGermany opposes a proposal by France and Italy to use bonds to finance a new 5 billion euros European Union defense research fund.

It was saying it would not be a viable way to finance European military projects, according to Handelsblatt.

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Such a plan would "violate the basic principles of good budget practices and therefore is not a viable option for financing European defense efforts," the paper quoted a German government paper as saying.

Germany also argued in the paper that it would be unacceptable to view national contributions to the fund, which was first proposed in November, as one-time measures to obtain exemptions from European stability and growth requirements.

The European Commission first proposed the fund in late November as a way of allowing European governments to lower costs by joining forces to buy new helicopters and planes.

Paris and Rome back a proposal from the commission that would allow money for the fund to be raised on capital markets, underwritten by capital or governmental guarantees, but Germany is strongly opposed, the newspaper reported.

It said Berlin could block any agreement to move in that direction.

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