Irish government rejects motion to stop sale of Israeli bonds

Euronews

a day ago

The Irish government on Wednesday defeated a cross-party motion that called on it to stop the Central Bank of Ireland from facilitating the sale of Israeli bonds.
The motion, presented by the Social Democrats and supported by Sinn Féin, Labour, and People Before Profit, was intended to block what many refer to as 'Israeli war bonds'.
The instruments provide economic support to Israel while it conducts military operations in Gaza, and Ireland's Central Bank currently approves the sale of these bonds in EU markets.
Bonds issued by non-EU countries must be approved by the financial regulator in one member state before they can be sold within the single market.
The bill failed with 85 votes against and 71 in favour, upholding the government's position.
Several TDs, Irish members of parliament, argued that Ireland should not be involved in financial instruments that fund destruction in Gaza.
The Central Bank estimated that Israel has raised between €100mn and €130mn from their sale.
Taoiseach Micheál Martin nonetheless rejected claims that the Irish government is complicit in genocide by allowing the facilitation of the bond sales.
Despite publicly acknowledging the severity of Israel's attacks in Gaza, he maintained that Ireland must oppose the military action within legal and diplomatic channels.
As such, the government argued that it cannot legally direct the Central Bank due to its independence under Irish and EU law.
When the same objection arose last month in response to a similar motion from Sinn Féin, party leader Mary Lou McDonald argued: 'We have over 20 pages of independent, robust legal opinion clearly stating that the bill is compliant with Irish law, European law and international law.'
As per the EU's Prospectus Regulation, non-EU countries like Israel must meet disclosure and legal standards to issue bonds in the bloc. If those standards are met, the Central Bank doesn't have the authority to reject bond applications.
'The Central Bank cannot decide to impose sanctions for breaches or alleged breaches of international law. It is for international bodies such as the UN or the EU to determine how to respond to breaches or alleged breaches of international law,' said Central Bank Governor Gabriel Makhlouf.
He added that the Genocide Convention applies to the Irish State, not regulatory bodies like the Central Bank.
The reason why the Irish Central Bank is at the core of this issue — despite Ireland being one of the EU countries that has been the most vocally pro-Palestine — is Brexit. When the United Kingdom voted to leave the European Union in 2016, Israel chose Ireland to be the home member state to approve its bonds. Prior to 2021, this responsibility fell to the UK.
The current prospectus for Israeli bonds is set to expire in September, but Central Bank officials believe that Israeli authorities will likely initiate the renewal process several weeks beforehand.
In the absence of new EU sanctions or changes to existing legislation, the Central Bank will remain legally bound to approve the bond prospectus, regardless of the political fallout.
Meanwhile, protesters have been gathering for months outside the seat of the parliament, Leinster House, and the Central Bank, demanding that the government block Israeli bond sales.
Britain's economic recovery suffered a setback in April, with gross domestic product (GDP) shrinking by 0.3% on a monthly basis, marking the steepest contraction since October 2023, according to data released by the Office for National Statistics (ONS) on Thursday.
The contraction, which exceeded market expectations of a 0.1% fall, has renewed concerns over the UK economy's resilience and intensified pressure on both Downing Street and the Bank of England (BoE)'s policy stance.
The April downturn followed a modest 0.2% expansion in March and comes amid a broader backdrop of weakening labour market data and fading consumer momentum.
The services sector, which accounts for around 80% of UK economic output, was the primary drag in April, declining by 0.4%.
Within services, the professional, scientific and technical activities subsector posted a significant fall of 2.4%. This contraction was driven mainly by a 10.2% plunge in legal activities, attributed in part to the impact of changes to Stamp Duty Land Tax thresholds in England and Northern Ireland.
The tax change prompted homebuyers to bring forward purchases to March, resulting in a sharp drop in related services, such as conveyancing and estate agency work, in April.
Advertising and market research also contributed negatively to GDP, with output down 3.4%, while growth in scientific research and development (up 6.7%) provided a partial offset.
The wholesale and retail trade and repair of motor vehicles and motorcycles subsector also weighed on GDP, declining by 1.2% in April after a 0.9% expansion in March.
Production output fell by 0.6% in April, with manufacturing production sliding 0.9% — adding to a 0.8% fall in the previous month.
Overall industrial production contracted by 0.6%, coming in weaker than the 0.5% decline expected by analysts.
Despite a rebound in construction output, which rose 0.9% month-on-month, it was not enough to counterbalance the broader economic dip.
The downturn in GDP comes on the heels of deteriorating labour market data released earlier this week.
The number of payrolled employees fell by 109,000 in May, the seventh consecutive monthly decline and the sharpest drop since May 2020. The total stood at 30.2 million, a 0.4% monthly fall.
The unemployment rate ticked up to 4.6% in the three months to April, in line with expectations, while wage growth softened.
Regular pay excluding bonuses increased by 5.2% year-on-year — the slowest pace in seven months and below the 5.4% forecast.
Despite the mounting economic headwinds, the BoE is widely expected to leave interest rates unchanged at 4.25% at its upcoming meeting next week.
However, traders have increased their bets on a rate cut in August, anticipating a 0.25 percentage point reduction as the economy shows further signs of cooling.
Overall, money markets are currently pricing two interest rate cuts of cumulative 50 basis points by the BoE this year.
Sterling came under pressure following the GDP release, with the euro rising to 0.85 pounds — the highest level in over a month during morning trading.
UK government bond yields extended their weekly declines. The yield on the two-year gilt fell to 3.90%, the lowest since early May, while the ten-year yield slipped to 4.53%.
Equity markets, however, remained broadly resilient. The FTSE 100 held steady around 8,860 points, just shy of Wednesday's all-time high of 8,885.
Among the notable movers, Halma plc surged over 8% on the back of strong corporate results. BP also gained 1.8%, buoyed by higher oil prices following the announcement of a trade agreement between the United States and China. On the downside, Intermediate Capital Group and EasyJet dropped 4.1% and 2.6%, respectively.