Exclusive-Germany rejects creation of new funding instruments for armaments sector, Finance Ministry says

By Maria ‌Martinez and Sabine Siebold

BERLIN, Dec 10 (Reuters) - Germany has turned down the idea ‍of a ‌new multilateral defence bank, dealing the latest blow to duelling proposals to create ⁠a global state-backed lender to help ‌rearm European and NATO member countries.

Berlin's finance ministry told Reuters on Wednesday that the German government rejects the creation of further financing instruments for the armaments sector, adding that neither the ⁠concept of a ‘Defence, Security and Resilience Bank’ nor that of a ‘European Rearmament Bank’ are currently being discussed ​in EU or NATO bodies and no process is ‌underway to discuss possible state participation.

"Strengthening ⁠defence capabilities is a new priority for the German government, " a German finance ministry spokesperson told Reuters. "However, the German government rejects the creation of further financing ​and funding instruments for the armaments sector. The German government's focus is on the rapid implementation of existing instruments, in line with the capability requirements of the member states."

It also added that financing should be achieved through the EU's newly ​created ‘Security Action ‍for Europe’ (SAFE), which provides member ​states with loans of up to 150 billion euros ($175 billion) for joint procurement.

Two competing proposals for a new multilateral institution to help raise funds for rearmament have been courting governments and banks for support. Both the ERB and the DSRB aim to create an institution with a triple-A credit rating - the highest - to rapidly mobilize ⁠capital for European defence procurement, but differ on proposed membership and lending terms.

An ERB spokesperson said that a multilateral defence ​bank would provide greater firepower towards Europe's rearmament than the region's existing initiatives, adding that a multilateral bank would "incentivise capacity expansion, reduce parochialism and get more bang for the defence buck." A spokesperson for the DSRB ‌declined to comment. 

($1 = 0.8593 euros)

(Reporting by Maria Martinez and Sabine Siebold in Berlin, additional reporting by Iain Withers and Marc Jones; editing by Anousha Sakoui and Elisa Martinuzzi. )