Just a matter of a few years ago, a visit to the Israel Diamond Exchange (IDE) in Ramat Gan on the edge of Tel Aviv guaranteed visitors a view of a bourse heaving with hectic activity. For visitors, simply entering one of the exchange’s four buildings could be a somewhat lengthy process due to the sheer number of visitors from across the globe aiming to buy goods from one of the bourse’s many hundreds of member companies.
The situation has now changed dramatically, however. Long regarded as one of the world's most dominant trading hubs for rough and polished stones, it is enduring one of the most severe downturns in its almost 80-year history. Whereas the exchange has seen downturns in the past – due to wars and ongoing conflicts as well as other events, such as the COVID epidemic – this decline has a much more terminal feeling.
Exchange members have spoken about the need for a more dynamic approach by its leadership for at least the past decade. Indeed, I was witness to many of those discussions and brain-storming sessions. In addition, I spoke on an ongoing basis for many years to diamantaires from across the wide scope of companies in the bourse – rough and polished, colored and fancy shape diamonds as well as those members that traded in HPHT treated stones and lab grown diamonds.
High-Profile Resignation Reflects Mounting Pressure
Highlighted by sharp drops in both imports and exports, rising global competition, and geopolitical tax hurdles, the crisis reached a dramatic turning point with IDE members shocked by the resignation of President Nissim Zuaretz well before the end of his due term in office.
Zuaretz, the founder and CEO of DN Diamonds, was elected as the IDE's 11th president in May 2024 for a three-year term. However, after leading the exchange through an increasingly turbulent period, he announced he would step down ahead of schedule, bringing forward elections for a new leader to late this year.
In public statements following his announcement, Zuaretz voiced deep frustration over a lack of government support for local diamond dealers, warning that the industry's survival is at serious risk.
"Israel has been hurt more than anyone. Companies that once operated in Israel and brought goods and workers here have moved to Dubai... If the situation does not change, we will be able to say goodbye to the Israel Diamond Exchange."
Trade Numbers Plummet to All-Time Lows
Statistics released by Israel's Ministry of Economy and Industry and industry paint a stark picture of the sector's steep contraction:
- Israel’s total annual diamond trade (combining rough imports and polished exports) has plummeted to approximately $4 billion, compared to $12 billion during its peak years a decade ago. The figure for the first half of 2026 came in at just $2.6 billion – the lowest figure in the industry’s history.
- Polished exports fell sharply in the first half of this year, dropping by 22% year-over-year to just $625.7 million. Little more than a decade ago in 2015 – in what now appears to be a golden age – annual polished exports reached nearly $7 billion 2015.
- Declining exchange membership: For the first time in the exchange's history, the annual number of retiring members outpaced incoming members, with new admissions falling from historical averages of 200 per year down to roughly 30.
Bourse Membership Has Plummeted
All of the figures are shocking, but the latter – relating to bourse membership – is perhaps having the biggest impact on morale. Some remaining IDE members claim that as many as half the bourse’s offices have either closed down or are barely working. And, according to some reports, there are former diamantaires who are taking on any work available in order to cover debts and make a living.
It would not be much of an exaggeration to say that in years gone by prospective new members would almost beg to be accepted to the IDE and receive a coveted office.
As the exchange expanded – both physically and in terms of membership – through the 1970s and 1980s, diamantaires took great pride in being bourse members. In much the same way that tens of thousands of Israelis today take pride in being part of Israel’s constantly burgeoning high-tech sector, so too did IDE members at that time.
Veteran members speak about the relative ease of selling Israeli diamonds certainly through to the 1990s. Some even sold diamonds in the streets around the diamond bourse, but having an office in one of the four prestigious buildings that comprised the IDE was seen as the ultimate mark of diamantaire who had made it.
Legion are the stories of diamond companies where its owners would sell diamonds in the morning, leaving them free to play cards or other table games in the afternoon.
Israel, at the time, was a leading cutter and polisher of diamonds, giving IDE members access to wide range of polished stones. And since this was before the Indian diamond trade began its ascent as a center for the cutting and polishing of small diamonds of 1 carat and below, profit margins were excellent.
Looking back, it was the first Gulf War of early 1991 that had the first deleterious impact on the Israeli diamond trade. This was the first time that foreign diamond buyers temporarily stopped their regular visits to Israel to view and purchase diamonds. Although the phenomenon largely returned to what it had been before the war, overseas customers noticed that it was possible to trade with Israel while not visiting the country.
Fast forward 30 years, and the ongoing conflict that has engulfed Israel since the October 2023 invasion of southern Israel by Hamas terrorists and the resulting decisions by foreign airlines not to fly to Israel has been a major factor in the slowdown of trade.
Israel Squeezed by Multiple Pressures
The sharp decline in Israeli diamond trading is being driven by a combination of new tariff burdens, aggressive regional competition, and global structural shifts.
1. New U.S. Import Tariffs
The United States represents a major destination for Israeli diamond exports. However, newly implemented U.S. tariffs on Israeli goods placed local traders at a significant disadvantage as compared with European competitors, such as Belgium, which maintain tariff-free access to the American market. Operating on narrow profit margins, many Israeli dealers report they cannot absorb these extra levies.
2. Rivalry with Dubai
Dubai has emerged as a major international trading hub, leveraging low tax rates, favorable regulatory environments, and state-of-the-art infrastructure. These tax advantages have lured a substantial number of Israeli dealers and foreign investors away from Ramat Gan.
3. Rise of Lab-Grown Diamonds
The rapid market penetration of cheaper, lab-grown (synthetic) diamonds has systematically eroded global demand for natural diamonds, driving down prices and profit margins across the global supply chain. Many Israeli dealers are now complaining that the IDE leadership should have taken a stronger line against trading in LGDs and promoting trade in natural stones.
4. Changing Consumer Buying Patterns
Downturns in luxury spending in key overseas markets—most notably China—combined with a shift among younger consumers toward experiential spending rather than natural gemstone jewelry, have placed prolonged pressure on market demand.
Final Words
Many Israeli companies have long since developed niche market segments and the country’s diamond sector still retains specialized expertise in cutting large "fancy" stones and rare colored diamonds, as well as many other types of diamonds. Nonetheless, turning the local industry around is a huge challenge and perhaps one that is beyond the reach of the local leadership given the parlous state in which it now finds itself.
There is little doubt that government intervention, potential tax relief, and diplomatic efforts to alleviate foreign tariffs are necessary, but the diamond industry does not appear to be on the government’s radar. In any case, even significant structural relief, is unlikely to be enough to rival the advantages held by Antwerp and, especially, Dubai.
Abraham Dayan for Rough&Polished from Tel Aviv
