On 1 September 2025, a little-noticed administrative decision by the financial regulator of one of Europe’s smallest countries set off a legal storm that is still building.

The regulator, Luxembourg’s Commission de Surveillance du Secteur Financier (CSSF), approved a prospectus for Israel’s diaspora bond programme allowing it to sell its “Israel Bonds” to retail investors across the European Union.

These bonds were explicitly marketed with the slogan “Stand with Israel. Israel is at War” – and the opportunity for Luxembourg to approve them came about due to growing outrage and accusations of genocide faced by Israel over its actions in Gaza.

For years, the bond programme had been anchored in Ireland, with its central bank serving as its regulatory home. But sustained parliamentary and civil society opposition in Dublin - linking the bond sales to the financing of military operations in Gaza - created enough pressure that the issuer of the bond, the US-based Development Corporation for Israel (DCI), sought a transfer.