"Do we want to be the bank for this war?"

The CSSF's decision means Luxembourg will now serve as the base for bringing Israeli government bonds to market across the European Union, taking over from the Central Bank of Ireland. This has drawn criticism from Luxembourg's opposition parties, as Israel uses these funds to finance its war in Gaza.

This is precisely how Israel advertises the loans to investors. The LSAP's Franz Fayot says:

"They address themselves to the Israeli diaspora abroad, in this case in Europe, about raising money for the country, to support the war effort, crimes against humanity, and effectively war crimes."

The financing of this, in addition to the supply of weapons, is a highly problematic point for many. "Now we are playing a central role in it. And I think that is really, extremely, problematic both for the reputation of the country and that of its financial centre," Fayot continues. And beyond that: "Also for the self-understanding of the Luxembourgish population. Do we really want to be involved in something like this? Do we want to effectively be the bank for this war?"

In Ireland, where the Central Bank previously authorised these bonds, there was major public and political controversy precisely due to this issue. The prospectus, or information document for investors, for the Israeli loans was checked by the Central Bank of Ireland, and its directors consequently had to justify themselves in parliament.

The Greens' Sam Tanson says "I would be interested to know if there was an exchange with the Finance Minister and the Minister of Foreign Affairs to look at the scope of that decision, not purely on a technical level, to make sure it was in compliance with the right directives. But beyond that what kind of signal are we sending with this action, this recognition?"

When asked, the Ministry of Foreign Affairs referred the question to the Ministry of Finance, which referred to the CSSF, which pointed to its independence. When asked what means the CSSF had in order to refuse to approve or handle the file, the financial watchdog replied "No comment".

The Left's David Wagner says:
 
"The fact is that a genocide in Gaza is underway. And also a probable annexation of the West Bank now. All this is openly declared. Everyone sees it. Everyone is watching. It is said regularly: this goes too far. And afterwards there are no sanctions, in no form."

Sanctions – European or national ones, in line with European sanctions – or false information in the prospectus, were the points that the Irish Central Bank had cited in its hearing as possible grounds for refusal. During the recent petition debate in the Chamber, it was said that sanctions could not be imposed on Israel without first setting up a framework.

Therefore, Sam Tanson asks:

"Where do we stand now? If such a framework existed to be able to take national sanctions, would a negative decision by the CSSF not have been much easier to make, compared to the arguments now being put forward, which basically hide behind formalism?"

The CSSF explains that, according to regulations, it only checks whether the information in the prospectus is "complete, coherent and comprehensible."

For this reason too, there had been debates in Ireland. In the prospectus approved last year by the Irish, Israel had not informed about legal proceedings before the International Court of Justice in The Hague – where Israel is being sued for genocide by South Africa. And the court has imposed provisional measures, stating that one should not become complicit. Is the information to investors complete if this reference is missing? Do they then know that they may be helping to finance activities contrary to law and international law?

Luxembourg is a member of the Court and has signed the Convention on the Prevention and Punishment of Genocide. Franz Fayot therefore asks about the hierarchy of norms:

"We know that we have signed a whole series of treaties and conventions on humanitarian law. And we must ask ourselves whether this is in line with those norms and regulations. There are a whole range of aspects that need to be addressed. Where does the money come from to repay the bonds? Does it come in part from illegal Israeli settlements? How secure is repayment? These are also technical questions, but fundamental nonetheless."

On this point, Israel has partly improved. The new documentation approved by the CSSF now explicitly mentions proceedings before the International Court of Justice. But how the money is used is still not specified: only that it serves Israel’s general financing needs. David Wagner adds:

"That means it is not clear, there is no transparency. That is one more reason to say we cannot accept these bonds at all. But I think it goes further: one must now exert such pressure on the Israeli government that it simply stops killing people indiscriminately. In the end, that is also what this is about."

The initiative to delegate approval of the Israeli prospectus – valid for one year at a time – from Dublin to Luxembourg came from Israel. The Irish Central Bank thus avoided having to decide again on a prospectus after the intense political controversies. Despite outsourcing the controversial authorisation to the CSSF, Ireland remains the “home state” for Israeli bonds on the European financial markets.

"They have now thrown the hot potato over to Luxembourg, which has picked it up", says Franz Fayot.

But pressure on Israel could also be exerted through the recognition of Palestine as an independent state. This month, Prime Minister Luc Frieden and Foreign Minister Xavier Bettel will travel to the UN General Assembly. By then at the latest, they will have to show their hand on whether they will recognise Palestine or not.

The following week, on September 15, they will also be in the Chamber’s foreign affairs committee regarding this topic.