European fiscal rules would need reform for higher defence spending, German minister says

By Maria Martinez

BERLIN (Reuters) - European and German fiscal rules would need to be reformed if higher defence spending was agreed among European partners, German Finance Minister Joerg Kukies said on Monday.

"It brings little to only change one without changing the others, because the additional defence spending affects both sets of rules," Kukies said in Brussels, referring to both national and EU rules.

Senior European leaders are meeting in Paris on Monday. They will discuss how to respond after U.S. President Donald Trump unexpectedly said he could meet soon with Russian President Vladimir Putin to talk about ending the war with Ukraine.

In parallel, European finance ministers are meeting in Brussels and discussing, among other topics, how higher defence spending could be financed.

German Chancellor Olaf Scholz has proposed adapting European debt rules for a limited time and only to allow for exceptions on defence expenditure that goes beyond the 2% quota set by the NATO military alliance.

"It would be a targeted reform," Kukies said in Brussels.

The finance minister said that defence cannot be permanently financed with additional debt and that many countries have shown that it is possible to comply with NATO requirements from regular budgets.

"We talk about an adjustment path and a temporary transition, not a permanent solution," Kukies said.

The new EU fiscal rules became effective in April last year and were negotiated in Brussels by former finance minister Christian Lindner.

(Reporting by Maria Martinez; editing by Matthias Williams and Bernadette Baum)