Lobby other EU countries to allow Irish Central Bank to drop Israeli war bonds, TDs recommend
Central Bank
from refusing to act as a competent authority in Europe for
Israeli
war bonds.
Third-country issuers, such as Israel, can choose any EU state as their home member state and competent authority. That authority reviews its bond prospectus and, in this case, authorises Israel to sell bonds in the EU market.
Before 2021, the UK was the EU home member state under the regulation for the state of Israel. Ireland was chosen as the new home member state following the UK's departure from the EU after Brexit in 2016.
Politicians from all parties have expressed 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'.
However, the committee has been told by the Central Bank that it is powerless to refuse to act as the competent authority under current rules.
The rules and criteria that determine approval of the prospectus do not cover Israel's continuing military activities in
Gaza
, but rather include risk rules based on financial and fiscal criteria.
The governor of the Central Bank, Gabriel Makhlouf, told the Oireachtas Committee on Finance in June that Ireland had no power to unilaterally remove itself from being the competent authority. Any decision to change that situation, he said, would be made by the third country, in this case Israel, and by that third country alone.
The committee, chaired by Sinn Féin TD
Mairéad Farrell
, published a report on Tuesday, the main recommendation of which was that the Government engage at EU level with a 'view to amending the EU Prospectus regulations to permit each individual European Central Bank to refuse to act as a Competent Authority'.
It has also recommended that the Central Bank conduct an immediate internal review in advance of any renewal in September of the Israeli bond prospectus. It said that review should determine whether it is in compliance with the levels of disclosure, accuracy and transparency required by the EU Prospectus.
At the meeting in June, committee members expressed concern that the continuing destruction and deaths in Gaza were not being taken into consideration in determining the right of Israel to sell bonds, which several committee members pointed out were being openly marketed as 'war bonds'.
The report states: 'In response to questions around whether enhanced scrutiny is applied to sovereign bond issuers involved in armed conflict or under international investigation, representatives of the Central Bank told the Committee that a judgement is made as to whether a prospectus is particularly complex and if there are issues that are challenging to articulate.
'Ultimately, however, the judgement rests on whether the disclosure is appropriate to the financial risk.'
At the meeting, members expressed concern with regard to both the exposure of the EU financially to Israel and the current situation in Israel.
'Members further described 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 report stated.
Amid cross-party opposition to the Central Bank continuing in that role, the committee has also recommended that any future review of its role as the competent authority by the regulator should take into account 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.
It also said the illegal situation created by Israel in the Occupied Palestinian Territories should also be taken into account.
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