Huddled around a small table, speaking a mix of Yiddish and Hebrew, the Orthodox Jewish traders debated the colour, purity and shape of a £325,000 diamond.
Dressed in black and white, curly side-locks dangling beneath wide-brimmed black hats, they and many others like them are among the newest, most conspicuous and best-received visitors to Dubai’s booming Diamond Exchange.
For most of the past five centuries, Antwerp in Belgium has been the global capital of the diamond trade, but the combined effects of the coronavirus and a historic diplomatic agreement last year have turned Dubai into a serious rival.
Days after the Abraham Accords were signed at the White House in September, normalising relations between Israel and the United Arab Emirates, Dubai and Israel’s diamond exchanges became official partners.
Within five months, trade between Dubai and Israel reached £200 million, with diamonds among the top five imports and exports.
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At the same time, the pandemic has disrupted supply, trade routes and the movement of traders between the industry’s traditional hubs in India, Belgium and Israel. Dubai, which remained mostly open and is only a three-hour flight from Israel, formed a natural meeting point.
“In my eyes it has already replaced Belgium and will continue [to hold that status] even after Covid,” said Ronald Wapnish, an Israeli trader. “I would have to do four or five trips to do what I can do in one tender here in Dubai.”
The influx of Jewish traders accounted for at least 20 per cent of the past year’s business, especially in larger-carat stones, said Martin Leake, secretary of the Dubai Diamond Exchange. Six of the 20 companies involved in a £36 million tender for uncut diamonds in Dubai last week were Israeli.
Adam Schulman, a South African dealer and observant Jew, moved his diamond tender house, Koin International, from Antwerp to Dubai at the end of last year, largely because of the pandemic.
He encountered scenes that would have been unimaginable in the Gulf state a year ago.
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“I remember seeing a group of ultra-Orthodox Jews speaking Hebrew and Yiddish to themselves and speaking Hebrew to the other Israelis around them, before switching to broken English and conducting deals with some of the local Lebanese dealers who were there,” he said, still incredulous at the tale.
Until recently, Jewish diamond traders felt unwelcome in Dubai and doing business there was almost impossible. The small number of Israelis invited to the exchange were subject to security protocols and would have to fly via a third country, often leading to a round trip of at least ten hours.
“Prior to the accords, it was very hush-hush — you certainly didn’t reveal your Jewish identity,” Schulman said. People wore baseball caps to conceal their skullcaps. “There were no kosher facilities, but what it is now is unbelievable. My clients who are Orthodox Jews feel much more comfortable than they do in Europe.”
Over the past two decades, 90 per cent of cutting and polishing work migrated from Antwerp to India, where manufacturers could polish at a fraction of the cost and had access to large trade facilities from financiers and banks. Instead of two points on the supply chain — Africa, where most diamonds are mined, and Belgium — there were now three.
Indians set up offices in Belgium, taking the rough diamonds to cut and polish before redistribution. The industry began to seek a destination closer to Africa and India, with more amenable tax arrangements and import-export regulations than Belgium. Dubai ticked the boxes. It has remained open apart from a brief lockdown from March to July.
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Leake said the influx of new business had made a “huge” difference to the Dubai economy in a difficult year.
Dubai has grown from virtually zero transactions in diamond trading in the late 1990s to £2.6 billion in 2003 and about £16.5 billion in 2019. Diamonds are among the top non-oil commodities traded through Dubai, along with gold.
Figures from The Kimberley Process, a multilateral global-trade-certification regime, show that in 2020, the UAE placed third in the world for imports of rough diamonds and second for exports, beaten only by Belgium. The shift in power is likely to be more marked this year.
Karen Rentmeesters, of the Antwerp World Diamond Centre, said that although Dubai might be gaining in market share, it would never be enough to oust Antwerp from the top spot, even with Dubai’s tax-free economy.
“The share that Dubai gained over the past year came from Israel,” she said. “They’re increasing their market share, but not to the detriment of Antwerp. What we’ve demonstrated throughout the pandemic is that we actually have a critical mass of buyers and sellers who don’t need to move or cross borders or step on aeroplanes.”
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Tom Debout, of diamond dealers Diamcad NV in Antwerp, was in Dubai for the £36 million tender. He is no longer sure of Antwerp’s resilience. “Will Dubai overtake Antwerp? I hope not,” he said. “We used to travel here five times a year; now it is as much as once or twice a month.
“Beyond the pandemic this will continue to be the case. It’s a normal evolution.”
