THE CENTRAL BANK Governor has said when making its decision to approve the transfer of Israel’s prospectus for the issuance of government bonds to Luxembourg, it was not obliged to consider the International Court of Justice advisory opinion which determined that Israel’s occupation of the Palestinian territories was “unlawful”. 

Appearing before the Oireachtas Finance Committee today, Gabriel Makhlouf said that “no final decision has been made by any court” on the matter of genocide. 

The committee heard that if Ireland had denied the approval of the transfer, Israel would not have been able to issue its bonds for this year. 

In July 2024, the ICJ issued another advisory opinion stating that Israel’s occupation of the Palestinian territories was “unlawful” and must end as soon as possible.

Makhlouf defended the decision to approve the transfer of Israel’s prospectus to Luxembourg, stating that the Central Bank “took the view at the end of the day” that if the securities were no longer going to be offered in Ireland, the Central Bank had no legal standing to refuse the transfer request. 

He said the bank “thought about it” and came to the conclusion that there was “no reasonable, proportionate argument that would justify us refusing the transfer”. 

Transfer from Ireland to Luxembourg

Government bonds – like those sold by Israel – are generally sold to investors on international stock exchanges. Their sale is facilitated by central banks.

The Central Bank’s role in the issuance of the bonds, which Israel advertises as a way to support the state at a time of war, has been a highly contentious political issue in Ireland. 

There have been multiple protests outside the Central Bank since the conflict between Israel and Hamas broke out in October 2023 due to Israeli ‘war bond’ sales being facilitated by the Irish Central Bank. 

Previously, Israel got its bonds rubber-stamped in the UK. After Brexit, it shifted to Ireland to retain access to the European market.

While Ireland is still considered the ‘home country’ for the Israel, in terms of the issuing of its prospectuses, in September, Israel decided to instead seek approval from Luxembourg.

It’s worth noting this wasn’t an active decision from the Irish Central Bank, but one that Israel made. However, the request to transfer to Luxembourg, which was made to the Central Bank, was the key issue up for discussion today. 

Committee members, such as Sinn Féin’s Mairead Farrell and Senator Mary Alice Higgins, pointed out to the governor that it in its own rules, it sets out that the Central Bank “may accept or reject a transfer request” and that it can be done on a “case-by-case” basis, if certain criteria is met. 

Discretion to refuse request

Gerry Cross, Director of Capital Markets and Funds for the Central Bank acknowledged that it did hold discretion, but argued that it was the bank’s view it did not have legal basis to block the transfer. 

Higgins pointed out that the Central Bank is obliged under its own regulations to be compliant with human rights law, and questioned why this could not be drawn upon as one of the factors that could deny the request. 

The governor said the Central Bank “did all the necessary things we had to do to come to a decision, taking in Irish and EU law”.

When Higgins asked why the advisory opinion of the ICJ from July 2024 was not considered when reaching a decision to approve the transfer. 

While she said that the advisory opinion is not law, she said it is the highest authority’s definitive interpretation of what law applies and “speaks about the obligation on states and others to prevent trade or investment relations that contribute to the maintenance of the illegal situation created by Israel and the occupied Palestinian territories”. 

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Makhlouf said: 

We are going to disagree on this senator. I’m afraid an advisory opinion does not bind the Central Bank of Ireland in having to make a decision.

He said a transfer of approval request needs to be considered in a particular context based on criteria, such as placing an importance on the issue of maintaining “connectivity”.

“We concluded that there was no legal basis on which to refuse the transfer… We are the decision makers here. We have to make the decision, we take into account the law as we see it, and we have to operate… within a framework that requires us to also be proportionate and to be reasonable,” he added. 

When asked if the Central Bank would release the legal advice it received around the decision to approve the transfer, which ultimately allowed for the Israeli bonds to be issued this year, the governor refused.

He also said he would not release any documentation to the committee around its decision-making process, despite Social Democrats TD Cian O’Callaghan stating that it is in the public interest. 

O’Callaghan said: 

“When you thought about all the issues, did you not think about the obligations under international law and the genocide taking place. Given that you’ve told us you have absolute discretion in this decision making process, how could you not have given that sufficient consideration.”

Makhlouf said “the idea that we sort of ignored and dismissed our legal requirements, etc, is incorrect. We have been thinking, as you can imagine, we’ve been thinking about this issue extremely carefully for some time and we came to the view that we did on the transfer”.