Germany opposes a Franco-Italian proposal to finance European defense public procurement via a €5,3bn Eurobond issue, Handelsblatt reports on Monday.

The German financial daily sites government sources, insisting on the principle that defense procurement must be financed by member states alone rather than mutualized debt. Berlin is ready to veto any such an initiative.

The European Commission has proposed a fund that would lower the cost for the procurement of helicopters and planes. Paris and Rome followed up with the idea of funding defense procurement with Euro bonds guaranteed by EU member states.

Berlin is in principle opposed to any form of mutualized debt while also categorically opposing any one-off exemption from stability and growth pact. Germany was one of the first countries allowed to deviate for Maastricht criteria in the late 1990s.