Editor’s Note
The recent normalization of ties between Israel and the UAE is swiftly translating into concrete business moves, particularly within the diamond trade. This article explores how shifting geopolitics are reshaping commercial corridors and global industry dynamics.
The week Israel and the United Arab Emirates normalized ties, Israeli diamond dealer Zvi Shimshi headed to open a company in Dubai, a major regional trading hub for precious stones. He is one of 38 Israelis who have contacted the Dubai Multi Commodities Centre (DMCC), home to the Dubai Diamond Exchange, to establish a presence in the emirate, signaling how shifting regional politics could alter the dynamics of global trade.
Dubai traders say they have been flooded with inquiries from Israelis, who traditionally trade in Antwerp, Belgium, the world’s largest center for rough and polished diamond dealers.
Dubai, with $21.2 billion in diamonds traded last year according to DMCC, and Israel, with around $12 billion according to its exchange, are the leading diamond centers in the Middle East.
Before the US-brokered agreements last month that saw the UAE and Bahrain become the first Arab states in a quarter-century to establish formal ties with Israel, trade between the hubs was small and discreet due to regional political sensitivities.
The UAE has repealed a law banning trade with Israel, and Emirati and Israeli officials have touted significant economic opportunities created by the opening, which will also allow direct flights between the two countries.
Dubai, primarily a rough diamond hub, has grown its industry from about $3 million in 2000 by leveraging its proximity to Africa, where many diamonds are mined, and India, where 90% of the world’s diamonds are polished.
Antwerp, which recorded total diamond trade of $37.1 billion last year according to the Antwerp World Diamond Centre (AWDC), has maintained a stable share of the rough diamond market since 2017, according to Kimberley Process figures, while Dubai’s share has increased. The UAE is the third-largest rough diamond trading hub after Belgium and India, with Israel and China rounding out the top five.
DMCC figures show Dubai imported $4.2 billion in polished diamonds in 2018, down from $7.3 billion in 2012, and exported $3.96 billion in 2018 compared to $5.35 billion in 2012.
For Israel, which has a substantial polished stone market, Dubai offers closer links to India and connects it with the Arab world, where most countries still do not have formal relations with the Jewish state.