Encourage other European nations to approve the Irish Central Bank's decision to disinvest from Israeli government bonds, as suggested by members of the Irish Parliament (TDs)
The Irish Central Bank is under scrutiny for its role as the competent authority in the European Union (EU) for approving prospectuses of Israeli bonds, a role that has sparked political and public unease. The concern arises because the bank, while legally mandated to approve these prospectuses, lacks the power to refuse them, even though these bonds are largely used to fund Israel's military activities in Gaza.
Under the EU Prospectus Regulation, third-country issuers, such as Israel, must choose an EU country’s regulator as their Home Member State to approve their bond prospectuses. Since Brexit in 2016, Ireland replaced the UK in this role for Israeli bonds. The Irish Central Bank must approve a prospectus if it meets technical standards of completeness and consistency but cannot refuse it on moral, political, or humanitarian grounds without changes in legislation.
This situation has led to calls for reform. The Oireachtas Finance Committee, in its recent report, recommends that Ireland’s Central Bank conduct an immediate internal review to determine whether it can lawfully refuse approval before any renewal of Israeli bonds. The committee also suggests that the Central Bank and other EU central banks should develop a mechanism allowing an individual national central bank to refuse to process prospectus certification requests for such bonds, thus decentralizing approval power and enabling refusal on ethical or legal grounds.
The Irish government is also urged to push at the EU level to amend the EU Prospectus Regulation to permit national central banks to refuse acting as competent authorities in cases like this, giving countries more control and preventing forced facilitation of controversial bond sales. There is also a proposal for Irish primary legislation (such as the Occupied Territories Bill) to legally ban the sale of Israeli war bonds via Irish approval, thus ending Ireland’s role in this system and supporting international law and workers’ rights related to the Israeli-Palestinian conflict.
The committee's report describes the prospectus regulatory regime as "narrow and arguably amoral ... Jesuitical in the way that it is interpreted and applied, which is mindful of only its basic, legalistic obligations in satisfying the regulatory framework in place". The judgement for a prospectus's appropriateness rests on whether the disclosure is appropriate to the financial risk.
The illegal situation created by Israel in the Occupied Palestinian Territories should also be taken into account in any future review of the Central Bank's role as the competent authority. The committee has recommended that any future review of the Central Bank's role as the competent authority should consider the nature of the case taken by South Africa against Israel under the Genocide Convention and the interim findings of the International Court of Justice (ICJ) in that regard.
Cross-party opposition exists to the Central Bank continuing in its role as the competent authority for Israeli bonds. The committee's report, published by its chair, Sinn Féin TD Mairéad Farrell, on Tuesday, expresses concern that Ireland is the competent authority that gives authority to Israel to sell bonds in the EU market, including what Israel markets as "war bonds".
[1] O'Connell, A. (2022). Irish Central Bank under fire over role in Israeli bond sales. The Irish Times. Retrieved from https://www.irishtimes.com/business/financial-services/irish-central-bank-under-fire-over-role-in-israeli-bond-sales-1.4797076
[2] Farrell, M. (2022). Central Bank must review role in Israeli bond sales, says Oireachtas committee. The Journal.ie. Retrieved from https://www.thejournal.ie/central-bank-israeli-bonds-4723786-Jul2022/
[3] O'Connell, A. (2021). Irish government urged to take action on Israeli bond sales. The Irish Times. Retrieved from https://www.irishtimes.com/news/politics/irish-government-urged-to-take-action-on-israeli-bond-sales-1.4769557
[4] O'Connell, A. (2021). Irish Central Bank powerless to block Israeli bond sales. The Irish Times. Retrieved from https://www.irishtimes.com/business/financial-services/irish-central-bank-powerless-to-block-israeli-bond-sales-1.4769555
[5] Ireland should lobby EU to change rules over Israeli bond sales, Oireachtas committee says. RTÉ News. (2022). Retrieved from https://www.rte.ie/news/politics/2022/0726/1306759-israeli-bond-sales/
- The Oireachtas Finance Committee has recommended that the Irish Central Bank conduct an immediate internal review to determine whether it can lawfully refuse approval for Israeli bond prospectuses, considering the ethical and legal implications associated with funding Israel's military activities.
- The committee's report urges the Irish government to push for amendments in the EU Prospectus Regulation, enabling national central banks to refuse acting as competent authorities in cases like Israeli bond sales, promoting more control for countries and aligning with international law and workers' rights in the Israeli-Palestinian conflict.
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