Simcha Lustig, the new chairman of the Israel Diamond Institute, said his country was hurt by losing sightholders at the launch of “Supplier of Choice” but is taking action to preserve its manufacturing base. That includes more joint ventures with overseas companies.

“Much of the manufacturing of smaller stones is being done in places where the costs are lower,” he said. “In each case the stones are manufactured with Israeli know-how and are brought back into Israel to complete the manufacturing, sorting, and marketing process.”

Lustig said the Supplier of Choice shakeout will likely decrease the amount of rough available to Israel, but the Israeli industry is already approaching “outside” producers in Canada, Africa, and elsewhere. But he added that “it is still too soon to know how [Supplier of Choice] will affect the Israeli industry. We don’t yet know if the total amount of rough sold to Israel will decrease, or if it will be simply divided up differently.”

Another challenge is attracting buyers. Since the second Intifada began in 2000, visitors have stayed away because of security concerns.

Lustig says buyers still come to Israel, although in lesser numbers than before, and the IDI is reaching out with missions to markets like China and Japan. The IDI may even set up an outpost in New York to serve Israeli dealers who do not have offices.

Still, he wants American retailers to know that in Israel “it is business as usual. Israel’s economic and social life is vibrant, tourism is on the way up. The weather is great, a really nice change from the cold North American winters. The Diamond Exchange complex is completely secure. Come and visit us and you’ll get a very warm welcome and a good deal on diamonds.”