Born in Cuba in 1946, Avi Paz, the president of the Israel Diamond Exchange was raised an educated in Belgium. He immigrated to Israel in 1965. He joined the diamond trade in 1971 and became an IDE member in 1972. Earlier this year, he was elected bourse president, stepping into the shoes previously filled by Shmuel Schnitzer. Paz, spoke to Diamonds & Gold of Russia about plans to develop Israel’s diamond industry including securing rough supplies, potential markets for polished and jewelry, and on the recent spate of bankruptcies in the Israeli diamond center.

DIAMONDS & GOLD OF RUSSIA: Have there been any developments regarding your previous talks with Alrosa head Alexander Nichiporuk and vice president Sergei Oulin over the direct supply of rough to Israel?

VI PAZ: Yes for sure. There are always talks between Alrosa and the Israel Diamond Exchange (IDE) about bringing rough here. I believe there will be new developments in the near future. At the end of November we had a meeting in Moscow to discuss these developments, and which will be the changes.

D&G: Does the fact that Nichiporuk has joined the HRD’s Board of Directors impact on Israel’s chances of securing rough supplies from Alrosa? Is this competition?

AVI PAZ: Alrosa as you know has offices in Israel, Belgium and India and they say they will open one in Hong Kong and Dubai so I believe the fact that they are on the HRD board won’t affect us. Alrosa is doing something very clever. They are developing their business all over the world and I’m sure that as part of the global diamond manufacturing business they have Israel in mind and will make the right decision.

D&G: What about other new markets for Israel like Poland and Eastern Europe—are those important destinations for polished goods?

AVI PAZ: I’ve been looking at the Russian market as a very serious one for polished and for a large amount of jewelry. I believe it’s only the beginning. Israeli diamond manufacturers and jewelers should bear in mind that Russia is a very important market to be developed and they should enter it as soon as possible because first come first served. Russia and other markets in eastern countries are good potential markets for the development of new business.

D&G: Do you think the IDE will be doing any promotional projects in these regions such as hosting Israeli diamond pavilions at trade shows there?

AVI PAZ: I believe that in the near future when there is a show in Moscow, Israel should look at it as an excellent opportunity to enter the Russian market, which is special and new.

D&G: What about the Far East?

AVI PAZ: The Chinese market is also something very special today. Export from Israel to China went up over 20 percent during the first eight months of 2005 and I believe that’s a very small percentage of the potential. Israelis are already in this market, but I think it’s only the beginning and if we’re talking about the potential of developing and growing this is the first market everyone should focus on for the next few years.

D&G: What about developments with Africa and Canada? Is Aber for example still planning to open an office at the bourse?

AVI PAZ: We are speaking to everybody and in the next few weeks I believe we’ll sign an agreement to connect a new building via a bridge to the Diamond exchange complex which will add 25 to 27 floors and 27,000 sq meters of space. I have many people who want to rent or buy an office there from all over the world and I think once we sign the agreement it will give a big push to those who want to come and open businesses here. The building will take about 2.5 years, but I believe people won’t wait to start making plans and moving. Once they know there is space to open an office, they’ll start doing so and dealing from Israel.

D&G: Which building will be attached?

AVI PAZ: We plan to build a new building on Jabotinsky Street . The agreement will be signed in the next few weeks. After it will be signed we will release all the details.

D&G: Isn’t there also space now in the Diamond Tower building since the top ten floors were purportedly bought by Lev Leviev, the Steinmetz brothers and other diamantaires?

AVI PAZ: I have never had official information about the purchase. We also haven’t had anyone from there ask us to connect them to the diamond complex. The moment they ask we’ll negotiate.

D&G: Is the State Bank of India still interested in opening a branch in the Exchange?

AVI PAZ: While at a congress in Mumbai, I had lunch with A.G Kalmankar – Deputy Managing Director & Group Executive, with Bharati Rao – Chief General Manager, and with Sunil Pant – General Manger. All from state bank of India . We discussed all the difficulties involved in opening the branch in Israel . In addition, during the opening session of the congress Mr. A.K Purwar, chairman of the State Bank of India, made an official announcement saying that they are about to open a branch in Israel Diamond Exchange.

D&G: Onto current issues of bankruptcies about which there has been some commotion. You have adopted a staunch position about negotiating with creditors representing diamond companies that have gone bankrupt or are facing financial difficulties. Could you explain this?

AVI PAZ: Everyone can negotiate and come to an agreement with creditors. IDE never interferes with negotiations, but the moment the negotiations end and IDE members wish to resume working at the exchange, the board of directors must decide if the member in question can work and stay with us or not. I believe we must think very, very carefully and know how to deal with this. If for example the member is bankrupt and doesn’t have any money but wishes to resume working as a member of the diamond club, it will be a danger to others. If the person still has money, then they’re not honest because they should have paid it back to those he owed. We shouldn’t just allow all members that went bankrupt to return. The agreements they reach with the creditors are fine. They can do that, but it doesn’t influence our decision.

D&G: So why are people not in favor of this reasoning?

AVI PAZ: Two weeks ago a diamantaire announced he was bankrupt. The same day his lawyer phoned me and asked if there are people who “take care of the bankruptcy.” I asked why? He said “because usually with diamond dealers we try to give back 50 percent of what we owe people and we come back to work?” This is not an acceptable way of thinking or of doing business. People who owe must return all the money and thinking they can manage the problem with a 40 or 50 percent debt remuneration is wrong.

D&G: So people are using the current attitude to break their fall?

AVI PAZ: Yes, they think they’ll give back 50 percent and carry on working. I’m sorry, I’m really against it and especially if they’re dishonest I won’t hesitate to give all the information to the police or the local jurisdiction and let them deal with it. Again, everyone believes that people who are corrupt should go to jail, but not everyone agrees that we should go to the police and tell them that someone did something illegal. I always tell my colleagues that if they can explain to me how to put someone in jail without dealing with the police I’ll be happy to learn and do it, but until then I’ll do it the only way I know how.

D&G: Do you think in the past these things have been hushed up?

AVI PAZ: I have no criticism against people who worked before me. I myself was a director for over six years. Maybe we weren’t strong enough in dealing with bankruptcy issues—these people must learn that it doesn’t pay to do it. Today I’ve changed the view of the law. I have said enough is enough! There are too many people who take advantage of the agreements and we must be stronger. I as a leader stand up and say diamond people must pay back 100 percent. No deal!

D&G: Why have there been so many bankruptcies lately?

AVI PAZ: First of all the diamond business has changed considerably over the last few years particularly the way of doing business. The business is more sophisticated and people had to get used to it and work in a new way. Those who didn’t stayed behind and have problems. Secondly, it is increasingly difficult to make money. That’s why many diamond people have gone into making jewelry to earn a few percent more. There were some businesses that realized they were having problems a few years ago, stopped at the right time and gave back 90 or 95 percent of what they owed others. They are honest so we must try to help them. But those who two or three years ago started having problems which just escalated deserve less understanding.

D&G: What are you doing to get Israeli jewelers and diamantaires to work together? Our jewelry industry is not faring badly with annual exports well exceeding $300 million a year mark.

AVI PAZ: You‘re right and since I was made president we have a new committee and have begun to hold talks with the jewelry industry. I believe the co-operation between the IDE and jewelry manufacturers should be closer and closer. We should not only talk, but hold events together and be more committed to each other, because more and more diamond dealers are themselves turning to jewelry manufacturing.

D&G: What about making the Jovella International Jewelry & Accessories Tradeshow in Israel a joint show?

AVI PAZ: We have met several times with the Israel Jewelry Manufacturers Association (IJMA) and we have established a common committee. The IDE and the Israel Diamond Institute want to intensify the relations with IJMA. The issue of the Jovella show will be considered at the next committee discussion.

D&G: You mentioned in the past that you planned to approach former Finance Minister Benjamin Netanyahu and his successor, and former Industry and Trade Minister Ehud Olmert, about issues relating to the development of the diamond industry. Have you done so?

AVI PAZ: Yes I have and there is a very good relationship between those in charge of the economy and the diamond business. They are leading Israel’s economy into to a very good future and are very open to maintaining and increasing the strength of the diamond industry.

D&G: Anything other developments you’d like to discuss?

AVI PAZ: The World Diamond Congress will be held in Israel at the end of June next year and we’re preparing something very special and great. I am optimistic that by bringing WFDB industry members to Israel, the congress will encourage customers to come back and buy from the IDE.