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Tel Aviv — “In other centres the leverage was tremendous, as opposed to here where we were much more conservative,” he said, referring to the low level of debt among Israeli firms. “We entered the crisis more prepared, so to speak.”
There have, however, been other problems.
The price for raw material has risen faster than that of the final product, eating away at profits. And a money laundering and tax evasion scandal at the start of 2012 scared away some customers. The investigations have ended and, so far, no one has been charged.
The diamond trading floor in Ramat Gan, a suburb of Tel Aviv, is the biggest in the world. Armed guards escort non-members and on one wall are mug shots of problematic dealers whom customers are urged to avoid.
Diamonds change hands freely across the rows of long dark tables that line the hall. On one side a seller could be local. A buyer across the way could represent some anonymous client on a different continent.
They scrutinise the stones under a magnifying glass, weigh them on sensitive scales and when a deal is reached they say “mazal ubracha”, a Hebrew phrase recognised in centres around the world meaning “luck and blessings”.
In 2011, rough diamond imports to Israel topped $4.4 billion and $7.2 billion in polished diamonds were exported. Every second diamond sold in the United States, according to value, came from Israel.
But only $1.5 billion of the stones were cut and polished locally, a much lower percentage than a decade ago. The rest were sent abroad to foreign firms or Israeli-owned factories.
“Once, everyone who sat in this room was a manufacturer,” billionaire dealer Lev Leviev said at the opening of a Gemological Institute of America (GIA) laboratory in September. “There was not a diamantaire who was not a manufacturer, and over the years we lost it.”
Salaries were just too cheap to compete with, he said, first in India, the world’s biggest importer of rough diamonds, and later in China.