Luxembourg has declined to renew its approval for the issuance of Israel Bonds, which expired on Monday, leaving Israel facing an uncertain future over its ability to borrow from investors across European Union markets, funding that helps bankroll its war machine and its genocide in Gaza.
Because Israel is not an EU member, it needs the financial regulator of an EU state to approve the legal prospectus that allows its bonds to be sold to European investors. Luxembourg's financial regulator, the CSSF, decided in May not to renew that approval beyond its August 31 expiry, with its director general saying that accepting the prospectus for consecutive years would circumvent European rules. With the authorization now lapsed, Israel must persuade another EU country to take over if it wants to keep issuing bonds in the European market, and it remains unclear whether any will step forward.
The significance of the move lies in what the bonds pay for. Israel Bonds, issued through the Development Corporation for Israel, are loans from investors to the Israeli government, and the capital they raise is not earmarked for any specific purpose but flows into the state's general budget, meaning it can and does fund Israel's military and defense spending. After October 2023, as Israel launched its genocidal assault on Gaza and ramped up military spending, the bonds were marketed around the world as a chance to "support Israel at War." According to Amnesty International, Israel raised 4.5 billion dollars on international markets through these bonds between October 2023 and January 2025, and bonds issued in the EU alone bring in around 2.5 billion dollars a year.
Luxembourg's decision is the second time in a year that an EU state has stepped away from underwriting Israel's borrowing. Ireland had previously served as the regulatory home for the bonds, taking over after the United Kingdom left the EU, but following sustained pressure from Irish parliamentary and civil society groups over the genocide in Gaza, Ireland's central bank confirmed last September that it would not renew its approval. Luxembourg then assumed the role, only to now let it lapse in turn, and pressure is already mounting on Ireland's central bank to clarify that it will not take the prospectus back. The bonds are being passed from state to state like an unwanted liability, as one European country after another balks at the legal and moral cost of enabling them.
That cost is precisely what rights groups have emphasized. Amnesty International has called on Luxembourg, Ireland, and all EU member states to stop the sale of Israel Bonds or risk complicity in Israel's ongoing genocide against Palestinians. The organization's Europe director, Steve Cockburn, said Israel had become increasingly reliant on foreign investment to finance its genocide, apartheid, and unlawful occupation, and that the bonds increase the funds available to the government to bankroll crimes that have wiped out entire families, leveled hospitals and schools, and forcibly displaced 90 percent of Gaza's population. Amnesty stressed that international law obliges all states not to aid or assist genocide, but to prevent it, and noted that Israel's military budget grew from 4.2 percent to 8.3 percent of its GDP between 2022 and 2024.
The affair also exposes the contradictions running through Europe's posture toward Israel. In the very month Luxembourg took over approval of the bonds, it also recognized the state of Palestine, holding in one hand a symbolic endorsement of Palestinian statehood while in the other underwriting the financing of the state destroying it. That contradiction is now, at least on the bonds, beginning to resolve in the Palestinians' favor, as the financial machinery that helps fund the genocide loses its European footholds one by one.
