ROBERT PINESPROFESSOR JUSTUS R. WEINER, ADVOCATE

BUSINESS ETHICS AND SOCIAL RESPONSIBILITY: A MIDDLE EASTERN PERSPECTIVE

BUSINESS AND ECONOMICS 48260NOVEMBER 21, 2011

Ethics within the Business Practices of the Israeli

Diamond Industry

World Diamond Industry

Three major world diamond capitals: Antwerp, Belgium New York City, USA Ramat Gan (Tel Aviv), Israel

Two categories: Gem-grade diamonds, used for

their beauty Industrial-grade diamonds,

used for their molecular properties

Most imported from Africa; global sales worth over $72 billion

Israeli Diamond Industry

World leader in the production of cut diamonds Polishing Center Trade Center

Diamond Exchange District, Ramat Gan World’s largest diamond

exchange World’s largest trading floor

Thousands of diamantaries, which are manufacturers of gem-quality diamonds

Israeli Diamond Industry, Statistics

In 2000, Israel exported more polished diamonds than Belgium and India combined

In the first quarter of 2011, Israeli diamond exports reached $1.2 billion 2010 Q1 only saw $829

million 39.6 percent increase

Participation in trade shows in Mumbai, Vicenza, Hong Kong, and Basel

Industry Process

Israeli involvement in:

• Sorting• Cutting and Polishing• Jewelry Manufacturing• Retailing

Efforts to Eliminate Blood Diamonds

Blood diamonds, or conflict diamonds, are: Mined from areas of conflict,

often using slave labor Sold to fund insurgencies,

wars, battles, etc.

Kimberley Process Certification Scheme UN-mandated process to

eliminate blood diamonds from the market

Only the 75 countries that are members of the Kimberly Process (KP) can import or export rough diamonds

Efforts to Eliminate Blood Diamonds

International

2003: Israel was the first country to issue a KP certificate, showing that its diamonds are conflict-free

2010: Mr. Boaz Hirsch of Israel named Chair of the KP In favor of a supranational

body to monitor and enforce the KP

Proponent of passing the chairmanship between trading and producing countries

Efforts to Eliminate Blood Diamonds

Domestic

Establishment of a Diamond Controller within the Ministry of Industry, Trade, and Labor. Monitors imports and

exports in accordance with the KP

Represents the government in forums dealing with conflict diamonds

Diversity and Integration in the Industry

A traditionally “Jewish” occupation in pre-WWII Europe

Establishment of Israel brought Jewish immigrants from a variety of backgrounds

Tension between the richer Ashkenazim and the poorer Sephardim influenced employment in the nascent Israeli diamond industry

Diversity and Integration in the Industry

Ashkenazim mainly worked in management, a legacy from their positions in Europe Belgium Germany The Netherlands

Sephardim were relegated to lesser, more strenuous positions

In recent years, many foreigners have taken positions as diamantaries in Israel

Diversity and Integration in the Industry

Mix of such diverse cultures resulted in tensions in the workplace during the early years

Today, the Israeli Diamond Industry is a standard for tolerance, diversity, and integration Every Israeli faces the

same threats; no room for discrimination

Global Jewish connections/networks have made the industry quite prosperous for all employees

Government Influence on the Industry

During the early years of the state, the government encouraged construction of diamond plants in development areas Tried to encourage growth

away from Tel Aviv Attempted to create new

sources of employment

Dire need to populate and industrialize the Galilee and Negev

Government Influence on the Industry

Eventual financial failures of most plants Locations deemed too

remote Inadequate amount of

working capital Irregular supply of resources

Mass buy-up through government backed company called Pituach Fears of a government

takeover Protests from foreign

governments, local manufacturing association

Government Influence on the Industry

Growth in plants, decline in employment Underutilization of plants Frequent cessation of

operations

“Plants… embroiled in wildcat strikes and frequent strife”

Mass migration back to urban centers

References

"Boaz Hirsch, Chair of the Kimberley Process." Israel Trade Commission. Israel Trade Commission, 26 Oct. 2011. Web. 20 Nov. 2011.

"The Diamond Industry Fact Sheet." Diamond Facts. World Diamond Council, n.d. Web. 20 Nov. 2011.

"Ethics Very Important Issue for the Diamond Industry." Diamond World. Diamond World, 30 June 2007. Web. 26 Oct. 2011.

Gradus, Yehuda, Eran Razin, and Shaul Krakover. The Industrial Geography of Israel. New York: Routledge, 1993. Print.

"Israel Diamond Industry Reports Strong Export Growth." Jewellry Outlook. Jewellry Outlook, 6 Jan. 2011. Web. 26 Oct. 2011.

The Israeli Diamond Industry. Israel Diamond Institute, n.d. Web. 26 Oct. 2011.

Siegel, Dina. The Mazzel Ritual: Culture, Customs and Crime in the Diamond Trade. New York: Springer, 2009. Print.

Szenberg, Michael. The Economics of the Israeli Diamond Industry. New York: Basic Books, 1973. Print.