Central Bank's role in approving Israeli bonds can be traced back to Brexit

Irish Times

a day ago

It is something else that can be blamed on Brexit. When
Britain
decided to leave the EU in 2016 it no longer belonged to the European bond market. The market allows sovereign states to raise finance by issuing bonds that they pay back over time.
The European Prospectus Regulation for bonds deemed that one European state would be the 'home state' that would determine if a non-
EU
state selling bonds had the financial wherewithal to trade the bonds in EU markets. The state would be chosen not by the EU but by the country selling the bonds.
Until 2016 Britain was the country which decided if a bond prospectus offered by
Israel
could be approved for sale in the EU. When Brexit happened, Israel decided that Ireland should fulfil that role. It wasn't the only one to do so in recent years. At an interesting meeting of the Oireachtas finance committee yesterday, Gerry Cross of the
Central Bank
told Shay Brennan (Fianna Fáil) that seven other countries had also done so in recent years: Georgia; Turkey; The Maldives; Côte d'Ivoire; Armenia, Benin and Ukraine.
To quote Macbeth: what's done is done and cannot be undone. Central Bank governor Gabriel Makhlouf told the committee that only Israel can decide to use another state to be the home country unless the EU at political level does what it did with Russia and imposes sanctions against Israel. Given the ties between some EU states and Israel, that's very unlikely to happen. Mr Makhlouf, Mr Cross and deputy governor Mary-Elizabeth McMunn told the committee that the EU regulation was strict; they could only make the approval determination based on financial stability criteria and not on wider geopolitical considerations. Effectively their hands were tied.
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This issue was a dominant one in political discourse again this week, with a second Dáil vote in as many sitting weeks over the bonds last night. This time the vote was on a Social Democrats motion and again it was defeated. As Marie O'Halloran reports,
two Independent TDs who support the Government
– Gillian Toole and Barry Heneghan – voted against the Coalition.
The debate last night revolved around the same issues. Taoiseach Micheál Martin and Minister for Finance Paschal Donohoe both took exception in the Dáil and other forums to the accusation from the Opposition that the Government was somehow complicit in the genocide because the Central Bank approves the bonds.
Martin completely rejected the assertion at the Fianna Fáil parliamentary party meeting last night. He has argued that the Central Bank was independent in its role, and that its determination was a technical one based solely on financial criteria.
Still, Ireland's unwanted status has made everybody uncomfortable.
Meeting offers further details on bonds
The three-hour meeting of the finance committee was interesting in that we learned that for all the trouble they have caused the returns from the bonds in Europe are relatively modest.
Israel has raised between €100 and €130 million from the bonds, Mr Makhlouf said. He said the Israeli government website marketing its 'war bonds' had stated it had sold bonds worth €5 billion. He said the EU accounted for only a fraction of that, with the US accounting for the bulk of it.
On what the bank can and can't do, he said: '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.'
Mr Cross, director for capital markets at the bank, confirmed that the Central Bank fees for the approval of Israeli bonds between October 2023 and May this year was €13,300.
The EU prospectus is due for renewal in September. When asked by Ged Nash (Labour) if there were new issues to be considered, Mr Makhlouf said the 'intensity of the conflict in Gaza probably does put a question mark [on] whether the financial viability of the state still remains secure'.
He added: 'The European Union has indicated that it's going to look at its co-operation agreement with Israel, and I think that's a factor, the fact that the finance minister [Bezalel Smotrich] has just been sanctioned by a number of countries.'
However, he said it should not be taken as granted that the prospectus would not be renewed.
Asked by Mr Nash about how employees of the Central Bank have reacted to its role approving Israeli bonds, Mr Makhlouf said that the views in the bank were a reflection of the view across society.
'They range [from] people who are very sympathetic to one side of the debate, but also people who are sympathetic to the other side of the debate,' he said.
Fallout of Arts Council ICT project continues
The Oireachtas committee on media and arts returned for a second time in recent weeks to its examination of the implications of a partially abandoned ICT project that cost the Arts Council €7 million and also cost its director Maureen Kennelly her job –
Minister for Arts Patrick O'Donovan made the decision
that her contract was not to be renewed.
The Arts Council has become the fall guy taking most of the blame for the failure. But yesterday the committee, chaired by Labour TD Alan Kelly, honed in on the action, or lack of action, by the then Department of Arts in the matter.
Ms Kennelly told the committee that the council had written to the department some 60 times in relation to difficulties with the project. It was disclosed that the department never escalated the issue to senior management beyond principal officer level.
Jack Horgan-Jones
has the details of how the department's shortcomings
were discussed during the meeting.
Pepper sprays Paul Gogarty with shouting
Jack Horgan-Jones
reports on a stand-off
between Independent TD Paul Gogarty and two anti-immigrant Dublin city councillors, Malachy Steenson and Gavin Pepper.
Both shouted him down when he tried to speak.
Mr Gogarty had been addressing a group of protesters objecting to the prospective State purchase of the Citywest Hotel, which is being used to accommodate people seeking international protection.
He did not get very far in his contribution. He opened his remarks with a 'preamble', saying that he did not condone any form of racism or abuse. 'I wasn't allowed to finish my preamble,' he said.
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Playbook
Dáil
08.47: Parliamentary Questions: Tánaiste and Minister for Defence Simon Harris
10.23: Parliamentary Questions: Minister for Education and Youth Helen McEntee
12.00: Leaders' Questions
12.34: Other Members' Questions
12.42: Questions on Policy or Legislation
13.52: Government Business: Statements on Fisheries
16.17: Government Business: Statements on Nursing Homes and Care for Older Persons
18.17: Topical Issues
19.17: Private Members' Bill:
Criminal Law (Prohibition of the Disclosure of Counselling Records) Bill, 2025
– Second Stage
21.17: Dáil adjourns
Seanad
09.30: Commencement Matters
10.30: Order of Business
13.00: Government Business: Statements on delivering a world class education system, which breaks down barriers and ensures every child can achieve their full potential
14.30: Seanad adjourns
Committees
Defence and National Security
09.30: Pre-legislative scrutiny of a general scheme: Defence Amendment Bill, 2025
Fisheries and Maritime Affairs
09.30: Extension of EU-UK trade agreement and the implications for the Irish fishing and seafood industry
Children and Equality
10.00: Insight into the priority topics and issues facing the department