Jewish Diamonds Find Favor in Arab Dubai

The Associated Press
Sunday, October 22, 2006; 3:32 PM

DUBAI, United Arab Emirates -- As Israelis and Arabs emerge from the war in Lebanon, a booming diamond exchange in this Arab country 1,300 miles away is hard proof that some Arab-Israeli ties have survived despite the region's tensions.

The two-year-old Dubai Diamond Exchange has put the Gulf emirate squarely inside a global business dominated by Jewish traders. And that, inevitably, means trade ties with Israel, another world diamond hub.

"There has been no visible platform for Arab-Jewish cooperation since the 1960s," said Chantal Abboud, Beirut-based representative of Antwerp's diamond industry in the Middle East. "Now, Dubai has created it."

Israeli Diamond Exchange president Avi Paz says diamonds and hospitality flow freely between Israel and Dubai.

"We came there, they came here. There is no problem at all," Paz said in Tel Aviv. "I wish that wherever I go, they'll host me like they hosted me in Dubai."

Officially at least, the Emirates still enforces some aspects of the Arab League's boycott with Israel, although a government official said most restrictions were dropped long ago. There are no direct flights to Israel and visitors traveling on Israeli passports are rarely allowed to enter.

Israel has peace treaties with only two Arab states, Egypt and Jordan, and in the Gulf, says Abboud, the Emirates is an exception as the only Arab country to allow Jewish diamond dealers to visit and trade openly, albeit on non-Israeli passports. Nearby Qatar also keeps discrete ties with Israel.

The 34-day summer war in Lebanon, between Hezbollah and Israel, dulled sales in Dubai's diamond markets but only temporarily, industry officials say.

"People don't mix conflict with business. The war will not affect the diamond trade in any lasting way," said Abboud.

The relationship was highlighted in March, when controversy arose over Dubai Ports World assuming the management of U.S. ports. At the time the chairman of Israel's merchant fleet told U.S. senators that his ships called often at DP World-owned ports in Dubai and worldwide, and faced no problems.

The Dubai Diamond Exchange, the Arab world's first diamond bourse, seeks to serve the largely untapped but diamond-hungry Gulf market _ the world's third largest for diamond jewelry, traders say.

So far, the exchange's tax-free transactions have coaxed more than 250 diamond dealers to become members, including Jewish-Americans, Belgians, Indians _ even Israelis with dual nationality, said Noora Jamsheer, the exchange's chief executive.

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