Irish central bank defends handling of Israeli war bonds before parliamentary committee

The Governor of the Central Bank of Ireland has defended the institution's handling of controversial Israeli war bonds, telling a parliamentary committee that it acted lawfully. Gabriel Makhlouf said the bank could not have prevented the bonds from being issued last year and could not stop them being issued again this year. He made the comments while appearing before the Oireachtas Joint Committee on Finance in Dublin.

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Mr Makhlouf said he understood the importance of the Israeli Bond Programme to the Irish public, but rejected claims that the central bank had grounds to block the approval process. He said there were no grounds to refuse the transfer of the approval process to Luxembourg, which took place temporarily last year. He also said the bonds were not marketed in Ireland last year at all, and that the bank had to act within the law.

The governor said some commentators had argued that the bank could refuse approval on the basis of provisional rulings from the International Court of Justice in the South Africa v Israel case. He said those proceedings are still ongoing and no final judgments have been made. He added that, as matters stand, there are no European Union sanctions on Israel restricting its ability to issue securities, unlike the sanctions imposed on Russia after its invasion of Ukraine.

The dispute has become part of a wider debate over how European regulatory rules apply to Israeli debt issuance during the war in Gaza and the broader legal case brought by South Africa. The central bank's position, as set out by Mr Makhlouf, is that it cannot act outside the current legal framework even if the issue is politically sensitive. He said any change to how EU prospectus regulations operate would have to come from the European Commission, and noted that the Irish government has raised the matter with Brussels.

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The comments are likely to intensify scrutiny of the approval process for sovereign-linked securities and the role of national regulators in cross-border financial oversight. They also underline the limits of domestic institutions when EU law and international legal proceedings are still unresolved. The issue has drawn attention because it sits at the intersection of finance, foreign policy and the legal consequences of the conflict in Gaza.

What remains unclear is whether Brussels will respond to the Irish government's concerns or whether the approval process will change before any further issuance. Mr Makhlouf told the committee he was not aware whether the other side had replied. The broader legal and political debate is expected to continue as the ICJ cases proceed and as questions remain over whether any future EU sanctions could alter the position.

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