Israeli companies purchase approximately 50 percent of the world’s rough diamonds, two-thirds of which are eventually exported to the US as cut and polished sparklers.In an effort to curtail the trade in diamonds from rebel held conflict areas such as Sierra Leone, Israel has become the first nation in the world to adopt the Kimberley process, an international standard that certifies diamonds as “conflict free.”

Nearly four percent of the global diamond production is regarded as ‘conflict diamonds’, creating a major economic strain on developing nations which depend heavily on the legitimate diamond industry for their economic and social development.

Israel is the international hub for the import of rough diamonds and the export of cut and polished stones. Israeli companies purchase approximately 50 percent of the world’s rough diamonds, two-thirds of which are eventually exported to the US as cut and polished sparklers. Israel’s total net polished diamond exports worldwide in 2002 totalled $5.209 billion.

The Kimberley Process is designed to stop the flow of ‘conflict’ diamonds to international markets. It is hoped that if enough countries enforce this certification scheme, the flow of rough diamonds from rebel-held conflict areas in Africa will be stemmed.

From now on, all shipments of rough diamonds to Israel will have to bear a Kimberley Certificate, attesting to the fact that the rough diamonds contained in the shipment are ‘conflict free.’ In addition, as per an agreement reached at the World Diamond Congress in October 2002, all invoices for the sale of rough and polished diamonds will from now on include a declaration that these diamonds are ‘conflict free.’

The very first Kimberley certificate was issued at the Israel Diamond Exchange on January 1, 2003. Israel thus became the first country to take action, following the final decision on the implementation of the international scheme for documenting trade in rough diamonds, which was reached in Interlaken, Switzerland two months ago after a process which took more than two years to finalize.

The move supports existing UN Security Council sanctions, thereby contributing substantially to peace efforts. The proposed control system will not only contribute to peace but will also protect the legitimate diamond industry.
The Process involves more than 30 governments, including the United States, the European Community, the diamond industry and civil society. It has been establishing minimum acceptable international standards for national certification schemes relating to trade in rough diamonds.

“The Israel diamond industry has supported this process from the beginning,” said Shmuel Schnitzer, President of the Israel Diamond Exchange and the World Federation of Diamond Bourses. “Three years ago we were the first bourse to pass a resolution condemning trade in conflict diamonds and calling for the expulsion of any diamantaire trading in such stones. Today I am gratified that Israel is leading the way in the implementation of this very important agreement.”

The Diamond Controller of Israel’s Ministry of Industry and Trade reported last week that the net polished diamond exports of $5.209 billion represented a 15% increase from the 2001 mark of $4.529 billion.

Rough imports for the year increased 30.2% to reach $4.395 billion, compared to $3.375 billion in 2001. Rough imports directly from the Diamond Trading Company remained stable at $800 million. Rough exports increased by 59.5% in 2002, totalling $1.622 billion.

In 2002, the United States remained the largest market for Israel’s polished exports, continuing to account for 68%. Gross sales to this market rose to $5.704 billion, compared to $4.933 billion in 2001.

Sources in Ramat Gan emphasized that these figures are especially impressive, at a time when its most significant markets have not fully recovered from the economic downturn caused by the hi-tech crisis and the events of September 11.

Schnitzer said that the continued growth in polished exports from Israel reflects the strength of the Israeli industry.

“Despite the fact that 2002 was a difficult year for our markets, we are pleased that most of our clients remained loyal,” he said.