Thursday, May 29, 2003

Long Vacation
I know it has been awhile since my last post--seems to be a little endemic with me lately. I think graduating has made me a little less motivated, but I am hoping the motivation will return slowly.

I am pasting here an interesting, long, but interesting story from the Wall Street Journal about Indians in Antwerp unseating Jews at the helm of the diamond trade.

ANTWERP, Belgium -- In what was once a predominantly Jewish neighborhood near Antwerp's central station, young Indians in Armani suits haggle with Hasidic diamond buyers in long black coats, side curls and skullcaps. Hoveniersstraat, a street once celebrated for its kosher restaurants, now offers the best curry in town.

The orthodox European Jews who established the world's most famous diamond district are being supplanted by Indians -- who, among other things, aren't required by their religion to close their businesses from sundown Friday to sundown Saturday.
"Many of the Hasidim have failed to keep up with globalization," says Ramesh Mehta, an avuncular diamond trader and one of the pioneers of Antwerp's Indian community, who has helped 50 Indian families set up their own diamond businesses here since the early 1990s.

Indians are among the world's most successful newcomers. They have reinvigorated the jewelry districts in New York and Hong Kong and revived the U.S. motel industry; they are among the programmers of choice in Silicon Valley and Berlin. In the global diamond world, Indians have been so successful that they are challenging Jewish dealers, even in Tel Aviv. About 80% of all polished diamonds sold world-wide pass through Indian hands.

Such a shift seldom takes place without some tension, and in Antwerp, that struggle is happening now. Many Jews who used to trade diamonds in the public hall of Antwerp's imposing Diamond Beurs are so worried about the new competitive pressure that they now prefer to meet clients in the privacy of their own offices for fear that Indians or other Jewish traders will poach their business. Many have changed their manufacturing practices, moving their cutting and polishing factories from Belgium to lower-cost centers such as Thailand and China. And in the retail-jewelry sector, some secular Jews are breaking ranks with the Hasidim and keeping their businesses open on the Sabbath.

"The secular Jews are not enchanted when the rabbis
knock on their doors and tell them to shut down, but they don't
listen," says Henri Rubens, a Jewish community leader and former diamond
trader, who is now in the real-estate business. "Nor are the Hasidim
enchanted by other Jews who put business ahead of religion."

In Antwerp, Indians' share of the $26 billion-a-year
(€22 billion) diamond revenues has grown to roughly 65% from about
25% in the past 20 years, while the Jewish share has fallen to about 25%
from 70%, according to both Indian and Jewish consultants who study the
global-diamond trade.

The new economic power of the Indian diamantaires (as
Antwerp diamond traders are called) has spilled over to the U.S.
diamond market. After gaining a foothold in Antwerp, many of the Indian
traders have expanded their businesses globally, to include California and
New York.

While the Jews try to stem their decline, the Indians
are demanding that their influence in the Antwerp diamond world
mirror their economic might. They want better representation on Antwerp's
High Diamond Council, the powerful body that regulates the city's diamond
industry. In February, the first two Indians were elected to the
council's board of directors, but many Indian dealers dismiss it as a
token gesture -- the board has 20 members.

"We make up the bulk of Antwerp's diamond trade and
yet have no voice on the most important trade bodies in town," fumes
Bharat Shah, an Indian diamond trader. Peter Meeus, the council's
managing director, says it is working hard to change the institutional imbalance.
"It takes time to change old institutions, but there is always room
for improvement," he says.

The stakes are huge. Antwerp, a Flemish port city of
500,000 people known for its hip fashion designers and conservative
politics, is the most important diamond-trading center in the world. About
90% of the world's uncut diamonds , and half of its polished diamonds ,
are sold here each year. The city, which even has a trolley stop called
Diamant, is home to 1,500 retail and wholesale diamond companies and
four diamond exchanges. One of the oldest, the Beurs voor
Diamanthandel, was founded by Jews in 1904.

A New Feel

On a recent day at the Beurs's expansive trading
floor, dozens of diamond sellers line up in front of long rectangular
tables to present their rough and polished gems. Sitting hunched over
electronic scales, wholesale and retail buyers from Tel Aviv, New York
and London peer through magnifying glasses at small piles of diamonds spread
out over white sheets of paper. Many of the traders bargain in
Yiddish. Among the Hasidim and Israelis are a number of non-Jewish traders -- but
in a hall the size of a football field, there isn't a single Indian.

"The Indians don't come here -- they are in their
offices where the really big deals take place," laments Yves Szerer, a
dapper young Jewish dealer.

Mr. Szerer entered the diamond trade a few years ago,
though his father-in-law, a former Antwerp diamond dealer,
advised him to pursue another career. He says he now wishes he had listened to him
and remained in the clothing business, his previous livelihood.

The Jewish diamond trade in Antwerp goes back to the
15th century, when Jews expelled from Spain and Portugal settled in what
is now Belgium. Antwerp's Jewish population grew as Jews fled
persecution in Eastern Europe. The city lost 30,000 Jews to the Holocaust,
and the industry all but disappeared during World War II, but the
population recovered. Today, the diamond district has more than 25
synagogues and several Jewish schools. Large groups of Hasidim assemble on
Hoveniersstraat and talk into their mobile phones, giving the neighborhood the
atmosphere of a modern-day shtetl -- a traditional Jewish village of
Eastern Europe.

But more and more, it feels like Bombay. The Indian
traders began arriving in the 1970s, drawn by the lucrative diamond
business and Belgium's liberal immigration laws. They are also religious,
practicing Jainism, an Indian religion that emphasizes nonviolence,
vegetarianism and respect for all living creatures.

Mr. Mehta says Jain and Jewish cultures share
qualities that make them well-suited to the diamond business: Both value
kinship, hard work and cross-border networking, useful qualities in a global
industry that depends on wheeling and dealing. Most Jain businesses
are operated by families spread across the world. Many of the families
come from Palanpur, in north India, and share the surnames Mehta, Jhavari
and Shah.

Across the street from the Beurs at the modernist
offices of Diampex, a diamond-trading company, Chief Executive Bharat Shah
inspects a small pile of rough gems. "I don't need a magnifying glass,"
he brags, running his manicured fingers across what look like pebbles of
glistening sand. "I can feel the quality." After haggling with a
Hasidic broker, he writes a check and hands him a sealed envelope.
"Mazel," Mr. Shah says -- the Hebrew word for "luck." The expression is as good
as a legal contract in the Antwerp diamond world -- both Jewish
and Indian -- and signals that the agreed price is final and can't be altered.

Mr. Shah, whose family comes from Palanpur, set up his
company in 1982, after he heard about Antwerp's robust diamond trade
from a fellow Jain who had settled here. Back then, he had the equivalent
of about €4 million ($4.68 million) in annual revenue; today it is
more than €35 million. Diampex has joint ventures with a broad
network of cutting, polishing and marketing companies in Bombay, New York,
and Los Angeles, nearly all managed by relatives.

Indians like Mr. Shah gained a commercial edge over
the Jews by sending their rough diamonds for finishing work to
family-owned factories in Bombay and the northern Indian state of Gujarat, where
labor costs are as much as 80% lower than in Antwerp. Even after paying
for transportation there and back, the Indians made out better than the
Jews, who until recently polished and cut their diamonds locally. The
reluctance of the Jews to seek out lower-cost production sites was
partly pride -- many considered themselves artisans and were loath to have
the delicate production process performed beyond their supervision.
It also was partly due to postwar psychology: Many were Holocaust survivors
afraid to part with their assets or send very expensive valuables far

The Indians also proved canny at polishing and cutting
the lower-quality rough diamonds that Jewish traders
typically overlooked, squeezing higher profit margins than their Jewish competitors
and pumping the profits back into their businesses. "We turned cotton
into silk," Mr. Shah says.

Mr. Shah notes that Indians have been trading diamonds
for centuries. India, where the world's first diamonds were
discovered in 800 B.C., provided most of the world's supply until the
18th-century diamond rushes in South Africa and Brazil.

Sharing Culture

In Antwerp, Jews and Indians are so embedded in each
other's lives that many of the Indian dealers speak Hebrew and Yiddish.
It is common to see donation boxes for Jewish charities in the
entrances of Indian businesses, and after a devastating earthquake in the
Indian state of Gujarat in 2001, Jewish diamond traders raised thousands of
euros for humanitarian aid. Jewish dealers know how to fix a
good cup of chai, the sweet, milky tea drunk by the gallon by Indian traders. Most
traditional Indian weddings have a special kosher section, and Mr.
Mehta says he has lost count of the number of times he has been lifted
up on a chair at a Hasidic wedding. A few years ago, there was even a
marriage between an Indian girl and a Jewish boy -- though such close ties
are rare. "We are not a very free society and they are not a very free
society, so we have a lot in common," Mr. Mehta says.

Isaac Keesje, a Jewish diamond dealer who has been in
the diamond business since the 1950s, says the two communities are
bound by a common entrepreneurial spirit and a strong moral code. A
religious Jain is his most trusted business partner. "We don't play golf
together or go to each other's houses, but we keep tens of thousands of
dollars worth of each other's diamonds in our safes and we haven't bothered
writing a contract in nearly 30 years. I only hope my son has a
business partner who is such a mensche," he says, using the Yiddish word for a
good human being.

Still, some Jews wonder if pressure from the Indians
signals the beginning of the end of Antwerp's Jewish diamond
district. In the past few years hundreds of Jews have abandoned the trade
altogether. Mr. Rubens, the Jewish community leader, thinks it is unlikely the
Jewish diamond trade will experience a revival. "We were too
complacent. Now that we realize it, it's too late," he says.

Mr. Mehta says the Indians are philosophical about
their success. He says this is partly because of their strong belief in
the Hindu notion of karma -- the idea that destiny is determined by a
person's actions in a former life. "If we do badly in business, we blame it
on bad karma," Mr. Mehta says. "Bad karma is almost impossible to
break -- just like a diamond ."

Write to Dan Bilefsky at


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