Luxembourg ends Israel Bonds approvals, leaving future EU bond issuance uncertain

Luxembourg will cease approving the sale of Israel Bonds from September 1, creating uncertainty about the future of these issuances within the European Union. The financial authority in Luxembourg, a key EU and eurozone center, will no longer approve the prospectuses required by EU law for offering Israel Bonds, which are mainly aimed at Jewish communities abroad and pro-Israel organizations.

This decision represents an embarrassment for Israel, as Luxembourg was only selected a year ago to replace Ireland. Ireland had faced significant criticism over Israel's policies in Gaza and the administered territories, leading to pressure on its central bank to stop approving prospectuses. As of September 1, it remains unclear which of the 27 EU member states will approve prospectuses for Israel's non-marketable government bonds.

Until the UK's departure from the EU in 2020, London handled these approvals. After Brexit, the process moved to Ireland. However, following the October 7 Hamas attacks and the subsequent war in Gaza, public and political sentiment in Ireland turned increasingly hostile towards Israel. Successive Irish governments have called for suspending trade relations, imposing sanctions, and prosecuting Israeli officials.

Amidst criticism and debate over Ireland's role in approving prospectuses, which some claimed aided the "Israeli war machine," Israel announced it was transferring the approval process to Luxembourg. This move was intended to preempt potential negative consequences. Israel Bonds raised over $2.5 billion in both 2024 and 2025, though the EU portion represents a minority of the total issuance.