Israel today a global tech power and a center for advanced defense industries, but during its first 15 years of existence, its two main exports were Jaffa oranges and diamonds.
Ever since the British Mandate authorities decided in 1936 to abolish customs duty on diamond imports into pre-state Palestine, the country has been the world leader in this sector, followed by Belgium. However, the Israeli government was less interested in diamonds or how they could be leveraged to its benefit, the result of which is that today Israel has dropped to third and fourth place. Those now in the lead are India (second place) and Dubai (first place). Israel has a hand in their achievements: the UAE studied the Israeli Diamond Exchange model, and adapted it to their needs, while India learned production methods from the Israelis.
Israel is still considered a world leader in quality polishing, yet there has been a consistent and significant decline in diamond imports and exports. The person elected to save both the situation and the Diamond Exchange's reputation is President of the Israeli Diamond Exchange Nissim Zuaretz, who took up his post a year ago.
In his first interview since taking office, the man who sells jewelry to the likes of Ivanka Trump, Victoria Beckham, Serena Williams and Kim Kardashian, tells "Globes" about the difficulties in the diamond sector, ("The government did not support the industry"), about his goals for the Diamond Exchange, ("I want to see many young people join"), and the effects of US President Donald Trump's policies on the sector ("About 60% of diamond exports are to the US. For us, even a 10% tariff is a lot").
"Promises were made, and I hope they start fulfilling them"
"I was appointed to this position to maintain the status of the Israeli diamond industry, which was plagued by crises. Our government did not support the industry, compared with Dubai, for example, where the government created a free trade zone. If Israel once had a turnover of about $20 billion and Dubai had $2 billion, now Israel’s turnover is $7-8 billion and Dubai has more than $20 billion," says Zuaretz. As he sees it, he wakes up every morning "to do battle with the government authorities and all the ministries."
The importance of the diamond industry is reflected in its exports, which consistently account for about 8% of all Israeli merchandise exports. However, the figures are declining: net rough imports last year fell by about 13% to about $800 million net, while polished imports fell by about 33% to about $1.5 billion. At the same time, rough exports fell by about 24% to about $630 million net, and polished exports fell by about 35.6% to about $1.8 billion.
How can the government help you?
"Since Dubai opened a free trade zone, 25,000 registered diamond companies have been established. If I estimate an average company of five people, that means 125,000 employees, about 95% who are foreigners. Some are Israelis who moved there due to the tax breaks, light regulation, and a supportive government. Our government has neglected the diamond industry. Over the past year, relationships with the heads of the Tax Authority, Ministry of Economy, Ministry of Finance, and the Dan Region Tax Assessor, who oversees us, have been excellent, but nothing has happened on the ground. Promises have been made, and I hope they will start to fulfill them."
What is the position of the Ministry of Finance and Minister of Finance Bezalel Smotrich?
"I met with the Minister of Finance for the first time recently, and we explained to him the need for a free trade zone. It was made clear to him that this is a matter of life and death for the industry. If the Tax Authority also helps with benefits for foreign investors, this great hub will recover: foreign investors will prefer Israel over Dubai. Clearly, everyone is in favor, including the head of the Tax Authority. The Minister said he doesn’t see why a move shouldn’t be made, which could bring income and contribute to the country. He requested a working group be formed on the matter. Minister of Economy and Industry Nir Barkat also supports it. I can jump through hoops but if nothing changes, we’ll see a decline."
"We brought in young people, we lowered the membership fees by 50% "
Zuaretz (52) is an unusual figure for the Diamond Exchange. His management strategy, age, and family background do not fit the industry profile. After the army, he did not enter the exchange through a family connection, as most do, but through the father of a friend. "I came from the outside and it was hard for people to accept that," he admits. "Even during the election for (Diamond Exchange) president, it was hard for people to digest."
His journey began as a salesman on the Diamond Exchange with the late David Arbov, a well-known diamond industry figure. A few years later, in 2007, they founded DN Diamonds, which has since won the President's Outstanding Exporter Prize three times, with export turnover of more than $150 million. The company is headquartered at the Diamond Exchange in Ramat Gan, and has branches in Hong Kong, New York, and Dubai.
"When I entered the industry 30 years ago, I was a kid, and my partner was 50," says Zuaretz. "I kept taking him a step ahead. One reason why the partnership broke up is that I saw a few steps ahead, and he said he was comfortable with the place he was in, and didn't want to take risks. I realized we had to rejuvenate the diamond industry."
You really don't see many young people in the corridors of the Diamond Exchange.
"We're bringing in young people, and we'll bring in many more. It's not just diamond families who are joining, and we've lowered the membership fee by 50% to NIS 50,000. We've eased the conditions, but there are still important threshold conditions beyond money, like trustworthiness. I want to bring in a young spirit because you can't just build on 80-year-olds. 30-40 year-olds think differently, technologically and marketing-wise. From the moment we decided to encourage new members to join, we had 50 new members in three months, which is more than we had gotten in three years, and another 100 are on the waiting list. The younger generation knows how to think, sees how to develop and move forward."
A major trend in the diamond industry is actually jewelry sales. "If you had told me a decade ago that I would open a jewelry store in the US, I would have said, 'Forget it, I'll buy diamonds and sell them.' But you have to think ahead. That's why I opened a jewelry store in Miami with a local partner, and our clients include Ivanka Trump, Kim Kardashian, Victoria Beckham and Serena Williams. In Israel, we set up a gallery complex at the Diamond Exchange with a huge store for marketing diamonds to the local market."
"Exempting diamonds benefits Israel’s deficit with the US"
Despite all his experience, nothing prepared Zuaretz and the industry for the bombshell that Donald Trump dropped: tariffs on Israel. The US is the destination of more than half of all polished diamond exports, with the rest going mainly to Dubai and Hong Kong. "When this happened, I contacted Prime Minister Benjamin Netanyahu directly, because in our industry, a 10% tariff is a lot," says Zuaretz. "He received the letter on his way to Washington. His professional team worked on it, because diamonds are an important matter for the Americans too."
As revealed by "Globes," a delegation of senior Finance Ministry officials traveled to Washington last week for a series of meetings about tariffs, with diamonds being a key issue. "I spoke with Smotrich with the understanding that the exemption of diamonds is also very important for our country - it will benefit Israel’s trade deficit with the Americans. The Chief Economist and the Ministry of Economy and Industry are working with the Americans, and I am working with Howard Lutnick , the US Secretary of Commerce. He knows the diamond industry very well, and I hope this will lead to good results."
What signals are you getting?
"I'm getting optimistic signals. A diamond is a mineral and the Americans exempted minerals from tariffs, and now there are discussions about whether it's one kind of mineral or another. The US understands that tariffs on diamonds hurt Americans. They have no mines and no production. They are consumers, and it harms the purchaser. It hurts their interests."
India is another country that is putting pressure on the US to exempt diamonds from tariffs. "Globes" has learned that Prime Minister Narendra Modi is working with Trump to implement a permanent exemption for the sector. India’s is motivated by the data on polished diamond exports, which fell by 16.75% in fiscal year 2025 to about $13.3 billion, the lowest volume in the post-Covid era. The diamond sector is looking to Israel in the hope that its influence on the Trump administration will lead to a comprehensive move across the entire market.
How did India overtake Israel?
"The cost of production in India is cheap, and therefore it is a large production center. We are bringing a factory here that will lower our production costs. We will be able to flourish as soon as the state supports the industry as in the past, so the diamond industry received various benefits, such as being the only VAT-exempt industry. The industry underwent new regulation, and the diamond industry was burdened with tax. It is the only sector that can take inventory after 13 months and not in the same year. This is wrong, and it happened because at the time they made a very bad agreement with the Tax Authority. We are meeting with them to fix this, and there is understanding, but regulation takes time. The great advantage of the Israeli diamond industry is that many companies here are the main suppliers for the largest jewelry companies in the world: Cartier, Van Cleef, Graff, Tiffany's. They love and want to work with Israel."
"Doha is the Diamond World Cup - We had to be there"
The political advantages of the diamond industry were evident, among other things, last February. During a tense period in the Middle East, and between Israel and Qatar in particular, Zuaretz was invited to an international diamond and jewelry congress held in Doha, as reported by "Globes." He and Israel Diamond Exchange CEO Eran Zini entered with their Israeli passports and were seated in the front row at the event in the presence of Qatar's Minister of Foreign Trade, Dr. Ahmed Al-Sayed, and the Chairman of the Tourism Board, Saad Bin Ali Al Kharji. The most senior Qatari figure to attend the event was Prime Minister Mohammed bin Abdulrahman Al Thani. The Dubai Commodity and Trading Corporation (DMCC) Executive Chairman and CEO Ahmed Bin Sulayem, noted the Israeli representation at the conference -- evidence that the UAE was pleased with the development.
"As president of the Diamond Exchange, I saw strategic importance in Doha. The event there is the Diamond World Cup, we had to be there. It is a professional event with global importance, and if we were not there, it would have harmed the diamond industry, which is Israel's economic ambassador to the world. After the establishment of the Abraham Accords, the first business relationship between the UAE and Israel was the opening of a DMCC office at the Diamond Exchange. There are 29 exchanges operating around the world, and the relationship between all of them is important."
Is there diamond trade with Qatar?
"There is trade with Qatar. The Qataris aspire to be as strong as the Emiratis. They understand how important diamonds are, they understand their power in the economic world. We won’t be out of the picture there, but we want to strengthen ourselves, not them. We have got to stay in the game."
Israel’s diamond trade with Qatar indicates that in the diamond sector, trade barriers between countries are significantly less than political and diplomatic ones. "We have economic ties with other countries, for example through Hong Kong to Malaysia and Indonesia. Israeli diamond companies have subsidiaries in Dubai, Hong Kong, and Belgium. It has nothing to do with whether you are Israeli or not."
The lack of political influence on the sector is also reflected in imports. In general, international diamond trade is subject to the Kimberley Process, a forum of 29 exchanges around the world that does not allow diamond shipments to be accepted without a stamp and full documentation of the country of origin, in order to prevent blood diamonds. The global industry has been in turmoil since 2022, due to sanctions against Russia, which is the source of about 33% of global diamond mining. Today, the bulk of Israeli imports are from South Africa, which did not stop diamond exports to Israel - despite the current war - Botswana, Namibia, Angola, Sierra Leone, Congo, and to a lesser extent, Australia and Canada.
"There is an ongoing connection of diamond merchants around the world. I work with Lebanese, and we have a friendly connection. I wish the world would behave peacefully, the way diamond merchants know how to trade. Lebanese, Iranian, Turkish or anyone else, it doesn't matter. Our trade relationship is amazing. I feel safe doing business with them."
Zuaretz concludes: "When I took office as president, I took on an almost impossible task. I understood what I was getting into, but I believe in the industry. It is a unique industry that has no equal in the world, and Jews have been involved in it for more than a century. About 15% of our workforce are haredi - I wish the whole country knew how to employ haredim like I do. I believe that I can restore honor to the exchange and save the place. They call me 'The Diamond Exchange Trump' because I came to make a revolution. I didn't come to be a seat-warmer. But this is an inter-governmental game, and our government needs to help. We don't want money. We want tools, and if we get them, we will win."
Published by Globes, Israel business news - en.globes.co.il - on May 22, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.