Diamonds make up something like 20-25% of Israel's exports and something like 8-10% of Armenia's exports in recent years. How did these two countries end up with such large diamond industries? I know theoretically it has to do with the fact that Jews and Armenians have traditionally served as "middleman minorities" in Europe and the Near East, but I'm wondering about the specifics in the case of diamonds, especially since diamond industry at this scale is relatively new. Diamonds have only been worth more than pearls, for instance, for a little over a century.
Just a question for you, as I don't have an answer on this subject: but are Israel and Armenia's exports in raw or cut diamonds? That would be a critical distinction, since diamonds can be mined elsewhere in raw forms, but must be cut somewhere, in most cases, before they are viable market products. If Israel and Armenia happen to have a large number of the world's best diamond cutters, that could be the explanation. Of course, you'd just want to know why they ended up with such a large proportion of diamond cutters, but at least it explains why the lack of mines is not an issue.
On another question between Israel and Armenia, why is there an Armenian quarter in the old city? The three others I get but Armenian?
Currently, the Israeli diamond market is dominated by one Lev Leviev, although I've seen indications that Israel was a big thorn in De Beers' side even before he came onto the scene. There are rumors that he established his diamond mining network with help from the Russian mob, but I tend to suspect that's just because he's Uzbek-born.
Additionally, jewelry is an old trade among Jews. I know that there were times and places in which is was one of the few trades Jews could legally practice, but not whether than came after the association or started it. It might be that cutting was already present in the population before the state was founded.