Diamond Industry in Israel

Israel’s diamond sector is principally a processing and trading industry and has historically depended on imported rough stones for cutting, polishing, and resale.[2] The basic commercial sequence is to purchase rough diamonds, process them, and export the finished stones; the industry’s value therefore depends on access to overseas supplies and buyers as well as on processing expertise and trade networks.[2] Diamond output was described as earmarked for export in one ministry-information profile, reflecting the sector’s international orientation during that profile’s reporting period.[10]

In the 1970s, Israel surpassed Antwerp as the largest wholesale diamond center and supplied more than half of cut and polished gem diamonds; this was a historical ranking for a particular period and measure, not evidence of its current position.[2] In 2020, cut diamonds were listed among Israel’s leading industries alongside high-tech products, pharmaceuticals, and natural gas, while a 2009 U.S. government profile described Israel as one of the world’s centers for diamond cutting and polishing.[11][12]

Trade values require careful interpretation. Gross exports, net exports, polished-diamond exports, rough-diamond exports, and total imports and exports are distinct measures; the value of exported finished stones includes the cost of imported rough diamonds and does not equal the value generated domestically.[8] A 2007 newspaper calculation, for example, compared net polished exports of $7.075 billion with $9.6 billion in rough and polished imports, estimating net added value at $780 million, while broader industry accounts have cautioned that high export totals can overstate the sector’s domestic contribution.[13][8]

Attempts to establish diamond cutting and polishing in Palestine preceded the sector’s successful growth. At the Eighth Zionist Congress in 1907, a proposal envisioned training orphans of the Kishinev pogrom as diamond cutters in Jerusalem. The following year, the Bezalel Academy proposed combining Yemenite crafts with jewelry making and diamond cutting, but the plan did not proceed after Ottoman authorities declined to waive customs duties on imported diamonds. Other early proposals also failed to create a lasting industry.[1]

The later takeoff drew on immigrant expertise and commercial connections. European Jewish diamond workers from the Low Countries brought technical skills and business ties to Palestine, and some had learned cutting or polishing in Antwerp.[2] Home-based finishing operations also developed in Petah Tikva, where workers polished partly finished stones sent from Antwerp before small operations grew into factories.[13]

Sources identify different milestones for the industry’s beginnings. British Mandate authorities abolished customs duties on diamond imports in 1936, a policy described as an important condition for growth, while the first workshops that took root opened in Tel Aviv and Petah Tikva in 1937.[14][1] A 2000 account dates the Israel Diamond Exchange’s founding to 1936.[15] A separate background account and an obituary place its establishment in 1947.[4][16] These dates may describe separate stages in the growth of the trade and its institutions, but the sources do not reconcile them into a single chronology.

Before the war, the industry remained small and relied on Belgium for rough stones and commercial outlets. Prewar Palestine had only about two polishing workshops and a small number of traders and brokers.[17] Netanya mayor Oved Ben-Ami sought rough-diamond supplies in 1939–1940, approaching De Beers in London and securing support from British, Belgian, and Antwerp institutions. The German invasion of the Netherlands and Belgium in May 1940 disrupted established European centers and accelerated efforts to bring European diamond professionals to Palestine.[17]

The German occupation of Belgium and the Netherlands in 1940 disrupted European diamond centers and supply routes, contributing to the rapid expansion of Palestine’s processing industry. A reduction in customs duties on rough diamonds in September 1938 had already improved manufacturers’ costs and was described in a historical study as a turning point.[1] Only about 40–50 European diamond professionals ultimately reached Palestine, but they trained local workers and young people. One account says wartime training compressed a process that took about three years in Europe to roughly three weeks; a separate study describes a specialized production system that shortened training from Antwerp’s three-year model to three months.[17][1]

Workshops opened in Tel Aviv and Petah Tikva in 1937, and the trade expanded markedly in the following years. A factory-and-employee series records one factory and 10 employees in June 1936, five factories and 200 employees in August 1939, nine factories and 700 employees in August 1940, and 32 factories and 2,500 employees in May 1942.[1] By 1943, another account counted 33 cutting and polishing shops employing about 3,500 workers, approximately 8 percent of all employed persons in Jewish manufacturing; workers were trained locally and machinery was built domestically.[18]

A late-1943 table lists 32 factories and 3,600 people, with 1,991 in Tel Aviv, 1,351 in Netanya, and 258 in Jerusalem. In the table’s separate count of 3,110 workers, 304 were women.[1] These figures are not directly identical to estimates of roughly 3,500 workers or the account reporting 5,000 polishers: the sources use different counts and categories, and the available material does not reconcile them.[18][17] The general pattern is clear: production clustered mainly in Tel Aviv and Netanya and grew from a small base during the war.[1]

The Palestine Diamond Manufacturers’ Association (PDMA) was established and authorized by the government in 1940. The historical study describes it as a tightly controlled organization: it was the sole importer of rough diamonds, manufacturers had to join, and membership was restricted to Jewish applicants. The association also regulated access to rough stones, factory operations, and exports; the study interprets these arrangements in the context of British wartime economic policy.[1] From summer 1940, factories were required to belong to the PDMA.[1]

The production system divided work into stages. Processing involved assorting rough stones, sawing, cutting or bruting, and polishing; rather than having one worker finish a stone from beginning to end, Palestine’s factories specialized workers in separate stages, particularly for small stones.[1] The method allowed faster training but required more workers for each finished stone. A worker quoted in the study objected that specialization “reduced the worker to the level of a machine,” criticizing the narrowness of the assigned tasks.[1]

The industry relied on imported rough stones and overseas buyers. Imports of rough diamonds from the Diamond Trading Company rose from 11,000 carats in 1940 to 472,000 carats in 1943. Polished-diamond exports grew from 1,032 carats in 1940 to 25,280 in 1942 and 58,655 in 1943; the United States received 88.3 percent of 1943 export volume, with the remainder going to Canada, Egypt, and India.[1] A contemporaneous 1944–45 account reported that a London syndicate controlling distribution of raw African diamonds made it difficult for Palestinian processors to obtain supplies. It attributed the syndicate’s position to efforts by the Belgian government-in-exile to restore Belgium’s prewar industry and described a Palestinian delegation traveling to London to negotiate; that explanation is the account’s attribution, not an independently established finding.[19]

Cut diamonds became a major component of Palestine’s wartime exports. They accounted for 25.2 percent of merchandise exports in 1942, 35.5 percent in 1943, 32.6 percent in 1944, and 42.3 percent in 1945.[1] These proportions reflected the value of finished stones, but the value added by cutting imported rough diamonds was substantially smaller than the finished stones’ total value.[1] Palestine replaced Belgium and the Netherlands as the free world’s wartime gem-diamond center, receiving rough stones from De Beers’ Central Selling Organization and selling polished stones mainly to the United States.[2]

Rapid expansion brought labor disputes. Historical strike data record 13 diamond-industry strikes involving 2,613 strikers in 1942 and 43 strikes involving 5,017 strikers in 1943.[1] A five-week general strike in summer 1942 involved about 2,600 workers in factories in Netanya, Tel Aviv, Jerusalem, and Ramat Gan. A subsequent agreement provided wage increases, a minimum wage for apprentices, and other changes to working conditions.[1]

The end of the war brought a sharp contraction. Antwerp’s return to diamond trading and cutting, renewed competition, falling American demand and prices for polished stones, and reduced imports and exports all contributed to the crisis in Palestine’s industry.[1] In one series, polished-diamond exports fell from $16.52 million in 1945 to $840,000 in 1948, while employment declined from 4,000 to 800.[1] The sector was almost at a standstill by 1949 following the revival of diamond centers in Belgium and the Netherlands, the diversion of rough-diamond supplies to those countries, and the War of Independence.[2]

The industry began recovering in the early 1950s. Under David Ben-Gurion and Levi Eshkol, government oversight shifted from the Mandate-era arrangement to a government diamond supervisor, while the state offered subsidies in return for establishing workshops in peripheral areas. Nineteen workshops opened between 1953 and 1957, including in Ofakim, Hatzor HaGlilit, and Kiryat Shmona; the industry took about a decade to regain its wartime level.[17]

In 1948, the Jewish Agency and the People’s Administration established a Department of Diamond Control, which became part of the State of Israel’s Department of Trade and Industry after independence. The new state regulated diamond imports and exports and required manufacturers to return foreign-currency proceeds from diamond exports to the treasury.[1] By 1952, Tel Aviv contained 66 percent of Israel’s 103 diamond factories and 70 percent of its 2,195 diamond workers.[1]

Access to rough stones remained a central concern. De Beers’ Syndicate directly controlled distribution of more than 80 percent of world rough-diamond output, while its direct sales to Israel remained about $7 million annually from 1950 to 1959. Israel’s share of rough-diamond imports from other sources rose from 24 percent in 1950 to 84 percent in 1959, and the high premiums on indirect supplies threatened further development. Israeli agencies sought direct sources in West Africa and negotiated with the Syndicate for a more adequate allocation; from 1961, Syndicate-supplied diamonds increased to more than half of Israel’s imports.[2]

The sector regained international standing in the 1960s. In the early 1960s, Israel was described as the world’s second-largest diamond gem center after Belgium, with between one-quarter and one-third of world polished-diamond trade and a similar share of polishers.[2] In the late 1960s, the industry had about 400 enterprises: roughly half employed fewer than 15 people, 45 employed more than 50, and only three employed more than 100. More than half of enterprises and workers were in and around Tel Aviv, over a quarter in Netanya, and the remainder in Jerusalem and development areas.[2]

The industry concentrated on melee stones and medium-sized octahedral rough stones. In one described process, a stone was sawn in half and polished in a sequence involving six specialists to create a round brilliant with 57 facets; stones of other shapes could be made into “fancies,” including marquises and baguettes.[2] Its specialized workforce and processing methods formed part of a wider shift in Israel’s economy. At a 2018 American Jewish Committee event, a speaker characterized the economy in its first 40 years as based largely on textiles, agriculture, diamond polishing, and minerals, and said economic change began after immigration from the former Soviet Union in the early 1990s.[20]

By the 1970s, Israel had become a leading global center for diamond trading and processing. It surpassed Antwerp as the largest wholesale diamond center and supplied more than half of cut and polished gem diamonds. The industry’s nucleus included European Jewish cutters who had immigrated during the Yishuv, and a handful of large firms dominated until the early 1980s.[2] These are historical claims about a particular period and a wholesale or processing measure, rather than proof of a present-day ranking.

A 1975 press account reported that Israeli diamond export business had grown from $8 million in 1950 to $562 million in 1974, and described Israel as specializing in small polished stones known as melees. It claimed that Israel supplied 80 percent of the world’s small polished stones and characterized diamonds as the country’s second-largest foreign-exchange earner after tourism.[21] A separate report put cut diamonds at about one-third of Israeli industrial exports in 1975—$600 million out of $1.8 billion—and about half of exports to the United States, or $153 million out of $310 million.[22] Another period account gave a different U.S. sales figure, reporting more than $200 million, and said the United States received about 35 percent of Israel’s finished gems.[21] The sources do not reconcile the differing figures, which may reflect different definitions or reporting methods.

The United States was a major market. In 1975, one report listed it as Israel’s leading customer for cut and polished diamonds, followed by Hong Kong, the Netherlands, Japan, Belgium, and Switzerland.[21] It also stressed that export revenue overstated the industry’s domestic contribution because substantial sums were spent buying rough stones abroad.[21] Another account noted that air transport suited these high-value goods and that diamonds had no “made in” label, making it difficult for buyers to identify where they had been polished.[21]

Ramat Gan became a central place for the trade. A 1975 account reported about $4 million in deals each day at the Israel Diamond Exchange and called its trading floor the world’s largest by trade volume. Transactions were sealed by a handshake and the phrase “Mazal u’Bracha” (“Good luck and blessing”), and a new 28-story exchange building was being constructed alongside an existing one.[21] These are descriptions from the period, not current comparisons.

The exchange’s physical and organizational role persisted. Its buildings are located in Ramat Gan’s northwestern business center adjoining Tel Aviv, among skyscrapers, a hotel, and high-tech businesses.[3] One background description gives a complex of three buildings totaling 80,000 square meters, with two trading halls, private offices, and about 2,800 members. It says the exchange sets trading and conduct rules, maintains internal judicial and disciplinary bodies, and offers arbitration for business disputes.[4] Another period description reported four connected high-rise buildings, 2,600 members, 100,000 square meters, about 15,000 daily visitors, and plans for a fifth tower.[13] These descriptions are time-specific snapshots rather than a single current specification.

In the 1970s, trade expanded alongside technical change. Export revenue from cut and polished diamonds rose from $550 million in 1975 to $715 million in 1976, a 30 percent increase. Rough stones mined in Africa and the Soviet Union reached Israel through third parties, mainly in Western Europe.[21] Skilled, comparatively inexpensive labor and advanced technology were described as advantages, including automated processing equipment near the Ramat Gan exchange. Sawing ordinarily removed about 2 percent of a diamond’s bulk, while the pintler, who marked a stone to determine the most economical sawing, was a particularly skilled worker; workers were paid by individual output.[21]

The international sourcing relationships extended beyond Europe and Africa. Israel–South Africa diamond trade predated World War II, declined after the war, and resumed in the 1950s. Rough diamonds important to Israeli cutting were purchased through the South African-controlled Central Selling Organization, which traded in London; the stones originated mostly in South Africa.[23] Belgian trade was also closely linked to diamonds: Belgium was among the leading European destinations for Israeli exports, which consisted mainly of diamonds, and was among the leading countries of origin for Israeli imports in the 2016–2017 account.[24]

India became a particularly important trading partner. Some ties are traced to Jain diamond traders from Palanpur, Gujarat, who established companies in Antwerp between the world wars and met Jewish diamond traders there. Contacts between Indian and Jewish communities in Antwerp and New York, together with facilities for cutting and trading diamonds, helped Indian traders establish companies in Tel Aviv.[5] Diamond business was a major example of India–Israel links that preceded formal diplomatic relations and accounted for 50 percent of bilateral non-defense trade in 2017.[5] During 2015–2017, diamond polishing and processing accounted for over half of imports from Israel and one-third of exports to Israel: $2.1 billion out of $4 billion in imports from Israel and $2 billion out of $6 billion in exports to Israel, excluding defense trade.[25]

The business structure changed as competition intensified. A slump from 1980 through 1982 was followed by restructuring and the creation of about 800 smaller manufacturing units. By the mid-1980s, smaller units focused on cutting while larger export firms handled marketing; the sector was supported by the Israel Diamond Exchange, the Israel Precious Stones and Diamonds Exchange, and the Israel Diamond Institute.[2] Net diamond exports were $905 million in 1982, 18 percent of Israel’s total exports, and nearly $1.7 billion in 1986, approximately 24 percent.[2] In 1997, Israel was likewise described as a leading center for cutting and polishing, with diamond exports traditionally accounting for about one-quarter of total exports.[26]

The restructuring did not prevent later reductions in labor-intensive polishing. Exports reached a then-record $4.5 billion in 1999, while the number of polishers had fallen from more than 15,000 about 15 years earlier to 3,000. The contraction was attributed to the difficulty of competing with Indian processors of small stones, and some Israeli firms shifted toward production, commerce, and diamond jewelry.[15] Diamond sales were reported at $5.5 billion in 2003 and $6.3 billion in 2004, with the United States importing 67 percent of the stones.[2]

Competition from India and China became a prominent challenge. Their lower labor costs and India’s expansion in processing small diamonds pressured Israeli firms, which responded by emphasizing quality and high-technology methods; Far Eastern markets, including Hong Kong, were identified as an opportunity.[13] By 2018, rising Israeli wages and India’s large-scale lower-cost polishing industry had eroded the earlier competitiveness of workshops in Ramat Gan and Netanya in polishing stones under one carat. Polished-diamond export volume declined by 45 percent between 2008 and 2017, to 1.7 million carats, while remaining Israeli polishing became a smaller niche focused on high-end stones over three carats.[7]

The sector experienced pronounced shifts in export values during the financial crisis and subsequent recovery. Diamond exports fell by more than 36 percent in the fourth quarter of 2008 compared with the same quarter of 2007.[12] An Israeli government profile reported $9.4 billion in diamond exports in 2008, said the industry was badly affected by the 2009 recession, and described a pickup in global demand and a return of exports to their previous levels during 2010.[27]

Official figures for 2017 reported net polished-diamond exports of $4.5 billion, compared with $4.6 billion in 2016, and net rough-diamond exports of $2.3 billion, compared with $2.7 billion. The United States received almost 47 percent of polished-diamond exports and Hong Kong 28 percent.[28] The report counted 1,130 polished-diamond exporters: 17 reported exports of at least $50 million, while 647 reported exports of up to $1 million. It said a global contraction in diamond trade affected Israel and that net polished exports declined by 4 percent from 2016.[28]

In 2021, industry imports rose 91 percent to $2.94 billion and exports rose 54 percent to $3.65 billion. Rough-diamond imports increased 94 percent to $2.07 billion, and rough-diamond exports rose 109 percent to $1.8 billion.[29] The preceding decade’s declining sales were attributed to parts of the polished-diamond trade moving to India, difficulty competing on labor costs, and competition from Dubai.[29]

The 2020 normalization of relations between Israel and the United Arab Emirates opened a new channel for exchange cooperation. The Israel Diamond Exchange and Dubai Diamond Exchange agreed to share expertise, open reciprocal offices, and promote regional precious-stone trade in September 2020.[30] The Dubai exchange opened its Ramat Gan office that year, and the Israeli exchange opened its Dubai office in February 2022; Israel exported $188 million in rough diamonds to the UAE in the preceding year.[6]

More recent reported figures show substantial contraction, although they use different measures. Israel’s Central Bureau of Statistics recorded gross diamond exports of NIS 26.4 billion in 2023, down 27.7 percent from 2022, and gross imports of NIS 16.2 billion, down 23.1 percent. Export destinations included the United States (54 percent), Hong Kong (10 percent), Belgium (8 percent), Switzerland (5 percent), India (5 percent), and the UAE (4 percent); leading import sources included Belgium (23 percent), India (20 percent), the United States (15 percent), Hong Kong (13 percent), and the UAE (12 percent).[9]

Reported net 2024 trade values show rough-diamond imports falling about 13 percent to $800 million, polished imports about 33 percent to $1.5 billion, rough exports about 24 percent to $630 million, and polished exports about 35.6 percent to $1.8 billion.[14] The exchange president quoted in the report said diamond exports consistently accounted for about 8 percent of Israeli merchandise exports and described the sector’s position as declining as India and Dubai grew as trading and production centers.[14] These net figures should not be equated with gross totals or other measures.[8]

The Central Bureau of Statistics reported net exports of rough and polished diamonds totaling NIS 5.3 billion in January–August 2025, compared with NIS 6.9 billion in the same period of 2024. It said diamonds constituted 5 percent of goods-export value in August 2025 and labeled the 2025 data temporary.[31] Diamond-processing exports were reported at $3.6 billion in 2025, down from about $4.9 billion in 2024, $6.4 billion in 2023, and $9.2 billion in 2022. Net polished exports in the first half of 2026 fell about 22.3 percent from the corresponding period in 2025, to $626 million; processing-export totals and net polished-export figures are different measures.[32]

A 2026 Ynet report described first-half diamond exports of $2.4 billion as an industry record low, compared with approximately $7 billion in polished-diamond exports in 2015. It put total industry trade—including rough imports and diamond exports—at about $4 billion for the first half of 2026, compared with about $12 billion during the strongest years.[33] The report attributed pressure to weaker global demand, Dubai’s emergence as a trading hub, lower-priced laboratory-grown diamonds, and a new 10 percent U.S. tariff on diamond imports. These are reported explanations rather than independently established causal findings.[33]

The same report quoted Diamond Controller Natalie Gutman saying that the volume of diamond trade was “only one-third of what it was a decade ago” and had declined consistently since 2022. It also reported that Israel Diamond Exchange president Nissim Zuaretz announced he was stepping down and quoted him criticizing Israeli tax policy and saying companies had moved operations to Dubai.[33] In October 2026, the exchange and the Israel Tax Authority agreed on a voluntary tax arrangement for 2027–2028. Under it, participating diamantaires’ taxable income would be set in advance at 1.3 percent of turnover, without requiring them to report that minimum in years when income was lower; the exchange presented the arrangement as a way to improve competitiveness against centers including Antwerp and Dubai.[32]

The industry’s work culture has combined specialized craft, commercial relationships, and changing technology. Historical accounts describe the pintler’s judgment in marking a stone for economical sawing, automated equipment, and workers paid according to individual output.[21] The production model has shifted over time: small firms and workshops have handled cutting, while larger companies have focused on export marketing and trade.[2]

The Ramat Gan exchange remains a focal point for commercial activity. A ministry-information profile described about 700 production facilities, mostly small workshops averaging 10–20 employees, with only 15 firms employing more than 100 people.[10] These figures belong to the profile’s reporting period and should not be read as a current census. The exchange also serves as a venue for face-to-face transactions and periodic gatherings. By 2022, trade that was once conducted in person could also take place remotely, while large regular gatherings at the exchange brought diamantaires together with their goods.[34]

Deals have traditionally been sealed with a handshake and the Hebrew phrase “mazal u’bracha,” meaning “luck and blessing.” Diamantaires interviewed in 2022 described the phrase as being used internationally in the trade; one interviewee estimated that becoming a member of the exchange could take about five years.[34] Earlier reports also described handshakes and the expression “Mazal u’Bracha” as features of trading-floor custom.[21]

Institutions have supported the sector through regulation, trade organization, and dispute resolution. The Israel Diamond Exchange sets rules for trading and conduct and maintains internal judicial and disciplinary bodies, while also providing arbitration in business disputes.[4] The Israel Precious Stones and Diamonds Exchange and the Israel Diamond Institute have also supported the industry.[2] Historically, government oversight has included control of diamond imports and exports and, in the early state period, requirements to return export proceeds to the treasury.[1]

Diamond trade has also served as a bridge between communities and countries. Historical ties between Jain traders from Palanpur and Jewish diamond merchants connected Antwerp, New York, and Tel Aviv, and the sector later accounted for a large share of non-defense India–Israel trade.[5][25] Trade with Belgium, the United States, and other centers reflects the industry’s dependence on the international circulation of rough stones, finished products, finance, and expertise.[21][24]

In 2009, a United Nations expert panel reportedly alleged possible Israeli involvement in the illegal export and sale of rough diamonds from Côte d’Ivoire and recommended a full investigation into possible involvement by Israeli nationals and companies. Israel’s Diamond Controller, Shmuel Mordechai, denied the allegation, saying Israel had never traded diamonds with Côte d’Ivoire and that Israel had provided visiting UN experts with proof it had not dealt in rough diamonds from countries outside the Kimberley Process. The cited report records an allegation and a denial, not an established finding.[35]

Descriptions of Israel’s global ranking also differ. Britannica calls the Tel Aviv-centered cutting and polishing industry the world’s largest, while Encyclopedia.com says India dominates polishing and lists Israel among the countries following it. The accounts do not reconcile their comparisons, and they may refer to different periods or measures; historical descriptions of Israel as the largest wholesale center in the 1970s concern a specific time and metric.[36][8]

Sources also give different founding dates for the Israel Diamond Exchange. A 2000 account says 1936, while a background page and a 2007 obituary say 1947.[15][4] The obituary connects the 1947 establishment with entrepreneurs including Moshe Schnitzer.[16] Historical employment figures likewise vary between tables and accounts using different categories.[1][18] Reports of 1975 diamond sales to the United States give figures of $153 million and more than $200 million.[22][21] Export statistics also vary according to whether they report gross or net values, rough or polished stones, processing exports, or total trade, so comparisons require matching the measure and period.[8]