Israel's gross diamond exports have crashed by a staggering 45 per cent since the 2014 massacre in Gaza that resulted in the death of over 2,200 people, mainly civilians including over 550 children.
The net value of Israel's diamond exports has fallen even further, by 60 per cent from $11.25 billion to $4.4 billion over the period. This is about the same as the value of Israel's total arms exports.
The Israeli diamond exchange initially blamed the decline on weak global demand and more recently on globalisation but the sudden step decline shows that's plainly not the case.
De Beers annual insight reports on the state of the global diamond market show demand increased slightly over the past five years. No other diamond exporting country has suffered such a steep fall. The Belgian diamond industry, which is major hub for both the rough and polished diamond trade to and from Israel, has also been impacted by the steep decline in Israel's exports. Meanwhile India has gained market share and in 2016, for the first time ever, exported more diamonds to the USA than Israel which has traditionally supplied up to 50 per cent of the US market in value terms.
There can be no doubt that one of the most important and the most vulnerable sector of the Israeli economy is feeling the impact of Israel's blood-drenched brand image. The global campaign of boycott, divestment and sanctions (BDS) has highlighted jewellery industry links to Israeli human rights violations which are funded to a significant degree by revenue from the diamond industry. Both appear to be impacting the Israeli diamond industry particularly hard with exports down a further 6 per cent in H1 2018.
This dramatic fall in Israel's No.1 export dragged down overall manufacturing exports by 22% between 2014 and 2017. According to data published by the International Trade Centre, Israel's manufacturing exports in 2017 were lower than they were in 2010 (Fig. 2).
The situation has become so serious that Israel is now offering to pay air fares as well as provide free hotel accommodation to attract buyers to Tel Aviv. Although the jewellery industry and NGOs have remained silent about Israel's leading role in the diamond supply chain human rights activists have campaigned to expose it.
In 2012 activists first revealed the linkage between the Steinmetz Diamond Group (SDG) and the Givati Brigade of the Israeli military which was responsible for the 2009 massacre of the Samouni family in Gaza, a suspected war crime documented by the UN Human Rights Council and others including Israeli human rights group B'Tselem.
This set in motion a series of actions that continue to reverberate through the upper echelons of the diamond industry. When the Anglo American owned De Beers Group put a Forevermark Steinmetz diamond on display in the Tower of London in honour of the Queen of England's Diamond Jubilee the Inminds human rights group staged regular protests outside the Tower.
A member of the Samouni family in Gaza recorded a video appealing for the blood diamond to be removed. The diamond was removed a few months later without any of the fanfare and publicity that accompanied it's unveiling. It hasn't been seen or heard of in public since.
Sotheby's Diamonds is a 50:50 partnership between Sotheby's, the famous auctioneering house, and Diacore, the now rebranded Steinmetz Diamond Group.
Since 2012, Inminds has staged a number of protests outside Sotheby's premises in Bond Street, London, highlighting the link to Israeli war crimes.
In January 2013, Sotheby's CEO and board were sent a registered letter alerting them to the damage to their reputation and the risks to their brand posed by their partnership with the Steinmetz Group. Months later in Geneva, in a blaze of global publicity, Sotheby's auctioned the Steinmetz Pink, a specimen diamond. It was bought by a syndicate of investors lead by Isaac Wolf for a world record US$83 million. The pre-auction publicity and spin gave no indication that the diamond was tarnished by association with Israeli war crimes in Gaza and was, therefore, a blood diamond. Four months after the auction it was revealed that the investors defaulted and Sotheby's were forced to take the diamond into inventory costing them millions.
In April 2017, in a much quieter event, the blood diamond was auctioned in Hong Kong and bought by Chow Tai Fook for $71 million.
The Isaac Wolf syndicate wasn't sued.
Sotheby's continues to partner with Diacore despite the fact that the Steinmetz Foundation "adopted" the Givati Brigade which stands accused of war crimes.
As news of the default became public it was also disclosed that Beny Steinmetz sold his interest in SDG to his brother Daniel and the company was rebranded as Diacore. Some observers believe this was an exercise designed to distance leading diamond brands including Tiffany's, De Beers, Sotheby's and Forevermark from the tarnished Steinmetz brand which is indelibly linked to the Samouni massacre. Evidence supporting this was leaked in the Panama Papers which showed that in 2015, Beny Steinmetz was still involved and asked Mossack Fonseca to backdate the transfer of his power of attorney to his brother to 2013.
Further indications that jewellers are shunning diamonds linked to Israeli human rights violations emerged earlier this year when it came to light, via a Tiffany & Co Form 10-K submission to the US Securities and Exchange Commission, that the iconic diamond brand had terminated a supply agreement with a Steinmetz owned mine in Sierra Leone. Tiffany's loaned Steinmetz $50 million to develop the mine and was one of their leading buyers.
Tiffany's divestment came following pressure from human rights activists who exposed the fact that Tiffany's sourced diamonds from a miner that donated to and supported suspected Israeli war criminals.
Although Tiffany & Co divested from a Steinmetz mine they continue to conceal the identity of the companies they buy 25-35 per cent of their polished diamonds from. Tiffany's customers cannot, therefore, know where their jewellery comes from as alluded to by their new CEO Alessandro Bogliono in Tiffany's Sustainability Report 2017.
"Our customers place great value on sustainability. They want to know where their jewellery comes from, how it is made and how the jewellery-making process impacts the planet as well as its people and communities. Tiffany & Co. holds this kind of transparency dear and, through this creation of shared value, we have a unique opportunity to build meaningful, lasting relationships with our customers. We are committed to sharing more with them — and all of our stakeholders — about what, exactly, Tiffany is doing to achieve sustainability for our business and for the planet as we very broadly define that goal: enriching the people and places we reach through our business; minimising our environmental impact; improving industry-wide practices; and channelling the power of the Tiffany brand as a force for positive change in the world."
Given Israel's leading role in the industry and the absence of a statement from Tiffany's stating, as they have done with Zimbabwe and Angola, they do not buy diamonds from the apartheid state, it is likely Tiffany's are sourcing diamonds from companies in Israel.
Diamond companies in Israel employ people who have served in and are members of the Israeli army, have openly funded and supported attacks on the defenceless residents of Gaza, have been widely implicated in serious fraud and who discriminate against non-Jews who make up 20 per cent of the population.
Furthermore, Tiffany's haven't paid reparations to the Samouni family or any of the victims of the Steinmetz supported Givati Brigade. Mitigation for damage caused is a key component of "responsible sourcing" as outlined in the OECD Due Diligence Guidelines to which Tiffany and Co, a member of the UN Global Compact, claims it is committed.
Although revenue from the diamond industry is a significant source of funding for an apartheid regime that has killed over 210 Palestinians including women, children, medics and journalists and injured and maimed thousands more with live ammunition in besieged Gaza in the past six months alone, jewellers fraudulently claim diamonds processed in Israel are responsibly sourced and conflict-free.
This blood diamond cover-up and fraud is perpetuated by public companies and governments who collaborate to shield rogue regimes in Israel, Zimbabwe and Angola that they depend on to keep their coffers full, bolster dividends for shareholders and provide fat pension pots for c-suite executives.
The Kimberley Process Certification Scheme (KP), the blueprint of which was drafted by the World Diamond Council, is the primary vehicle facilitating the ongoing blood diamond trade.
Although the remit of the KP is deliberately restricted to banning rough diamonds that fund rebel violence, jewellers use it to claim other blood diamonds are conflict free even when they fund war crimes and crimes against humanity.
Shamefully, Amnesty International, Global Witness, Human Rights Watch and Impact (Partnership Africa Canada), that the public rely on to expose the blood diamond trade and speak up for the victims, have said and done nothing to hold the diamond jewellery industry to account for funding Israeli war crimes and crimes against humanity.
The silence of NGO's on Israel's blood diamond trade means the Kimberley Process charade continues to con most people and can keep mainstream media focused on the mining sector in Africa. Meanwhile, high street jewellers launder cut and polished blood diamonds labelled responsibly sourced and conflict free to unsuspecting customers.
Hilde Hardeman is the EU chair of the Kimberley Process in 2018. Indications to date suggest that she, like others before her in South Africa and Australia, will ignore the latest call from human rights activists for Israel to be suspended from the KP until those responsible for massacres in Gaza are brought to justice and held to account.
Some voices in the jewellery industry are speaking out. The most recent example being the Ethical Jewelry Exposé: Lies, Damn Lies, and Conflict Free Diamonds, from Marc Choyt and his team at Reflective Jewellery. The exposé peels back the layers of bogus schemes "through the metaphor of Russian nesting dolls, with eight layers of babble obscuring the nefarious truth hidden at the core".
The exposé leaves readers in no doubt as to the magnitude of the fraud being perpetrated by the key stakeholders in the diamond industry, particularly the Responsible Jewellery Council which is now chaired by Signet Jewellers Vice President of corporate affairs, David Bouffard. Signet Jewellers source many of their diamonds from companies in Israel.
The successive withdrawal of human rights organisations from the KP, including Global Witness, Impact Transform, International Alert, Fatal Transactions and Ian Smillie – a key architect of the Kimberly Process scheme – has removed the fig leaf and left its exponents exposed with their bloody diamonds in full view.
Scrambling to conceal the blood diamond trade, the industry's most recent and emerging addition to the matrix of deception, is the use of blockchain technology to digitally log all transactions a diamond undertakes from mine to market. While the technology has the potential to give consumers the information needed to make an informed decision about the ethical provenance of a diamond, the detailed information will only be available to "authorised users" as "privacy controls" will prevent consumers from accessing "sensitive data".
Diacore, of the Steinmetz Group, was one of the first companies in a trial conducted by De Beers Group of their blockchain system, Tracr, earlier this year. It is clear, therefore, that blockchain will provide another layer of cover for the blood diamond trade while consumers are kept in the dark.
As the EU chairs a Kimberley Process plenary meeting in Brussels from November 12-16 it will be interesting to observe the corseted language emanating from the spin doctors. No doubt they will inform the public that the major reforms aimed at strengthening the KP and giving added assurance to consumers have been agreed. But one thing for sure, any reforms that are agreed will not extend to banning blood diamonds that fund rogue regimes guilty of gross human rights violations in Israel, Zimbabwe or Angola.
The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.