Central Bank governor Gabriel Makhlouf has insisted he had no legal standing to block Israel’s “war bond” transfer to Luxembourg and said the UN Genocide Convention and an international court ruling against Israel were “not issues” for the decision.
Facing sceptical questions at the Oireachtas finance committee, Mr Makhlouf said he had no scope to stop the Luxembourg switch that Israel sought even though bank documents say it has the right “in its sole and absolute discretion” to accept or reject such requests.
“The discretion that we have is fettered by statute. We have to operate within the framework that’s sort of presented to us,” Mr Makhlouf said.
“We took the view that at the end of the day if these securities were no longer going to be offered in Ireland that we had no substantive legal standing to refuse the transfer of approval request,” he added.
“We thought about the issues but in the end we came to the conclusion that there was no reasonable, proportionate argument that would justify us refusing the transfer of approval.”
Citing confidentiality rules, he declined to say when Israel sought the transfer or whether the bank provided any guidance or advice to Israel. That stance was questioned by Labour TD Ged Nash and Cian O’Callaghan of the Social Democrats.
Israel used bonds formerly approved by Ireland to part-fund its military campaign in the Gaza Strip, prompting criticism of the Central Bank. The bank gave its blessing in September to transfer the approval process to Luxembourg, raising committee questions as to why it did not exercise discretion to refuse permission. Refusing the transfer would have prevented Israel from issuing a new 2025 bond, as that bond could not have been approved by the central bank because it was not intended for sale in Ireland.
“You implied earlier that we had absolute discretion in this and I’m saying that our discretion needs to operate within a legal framework,” Mr Makhlouf said in reply to questions from Independent senator Alice-Mary Higgins.
“That legal framework essentially meant – or we concluded that it meant – that there was no basis for us to refuse the transfer of the approval.”
Ms Higgins countered that the expression “sole and absolute discretion” was in bank’s own guidance notes, and not her language.
She also said the bank was required to take into account the UN Genocide Convention and an interim ruling from the International Court of Justice (ICJ) on South Africa’s genocide case against Israel. Israel rejects claims has committed genocide in Gaza.
Mr Makhlouf said: “My point about the Genocide Convention and the ICJ advisory opinion is that in the context of the transfer of approval they’re not issues for us. They’re not determinative.”
Ms Higgins replied that international law was law: “There seems to be some idea that there’s the ‘real’ laws, which we look to – these prospectuses, these various pieces that we look to, the regulations – and then there is international law which is somehow aspirational.
“An advisory opinion from the International Court of Justice is a definitive interpretation of what international law already applies. It’s not an aspirational document. It’s not requesting that future laws would be made. It is telling states what laws apply to them.”