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Friday, February 6, 1998 - Page updated at 12:00 AM

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Iran's Pistachio Sales In Israel Drive U.S. Farmers Nuts

The Baltimore Sun

TEL AVIV - Of all the issues that divide the United States and Israel these days, who would think that one of them was pistachio nuts?

Israelis have a passion for the tasty nuts, and they've been importing them from one of the biggest pariahs in the region - Iran.

For more than a year, pushed by American pistachio growers, the United States has tried to pressure Israel to suspend the illegal importation of Iranian pistachios. America has threatened to punish lesser allies for doing business with Iran in violation of the U.S. trade embargo. Given Israel's stated fear of Iran's nuclear threat, the notion that the Jewish state was doing business with the evil empire seemed to American growers, well, nuts.

"It's a very, very frustrating situation, especially when you look at the level of funding our government, our taxpayers, our growers, are paying to support Israel," said Karen Reinecke of the California Pistachio Commission, the industry's main trade group. "For them to actually be assisting Iran is ludicrous."

Last spring, Secretary of State Madeleine Albright sent a tough-language cable on the matter to the U.S. Embassy.

"Reports of Iranian pistachios entering Israel . . . are a source of growing concern," the cable read. "Given the goal Israel has placed on the need for the international community to pressure and economically isolate Iran . . . such imports are unacceptable."

Israel denied the charges, claiming the bulk of imported pistachios came from Turkey. But the California growers pressed their claims. They say they have lost $65 million in trade with Israel over the past few years because of Iranian nuts.

Albright found Israeli efforts to stem the flow "insufficient."

Since then, Israel has scrutinized pistachio shipments, turned back some containers and indicted a well-known importer on charges that he illegally imported $273,000 worth of Iranian nuts.

"We told the Americans we are on the same side," said Zohar Perry, deputy director general for foreign trade in the Israeli trade ministry.

But the nuts apparently keep coming.

Of the 793,969 metric tons of pistachios imported by Israel between September and November last year, about one-third originated in the United States. Germany and Britain were listed as the source of more than half the imports - but neither country grows pistachios, the American growers point out.

The Iranians, the largest producer of pistachios in the world, aren't surprised that their nuts find their way to Israel, long described as "the Zionist devil" by the Islamic republic's reigning clergy.

"It's easily possible," said Asdollah Asgaroladi, vice president of the Iran Chamber of Commerce, Industries and Mines in Tehran. "Because business is business. Israeli people are much more than politicians. They are looking after their own interest."

Israelis are ranked the highest per capita consumers of the nuts in the world. It's a $17-million-a-year market that California growers would love to dominate. But they don't, despite a concerted marketing effort and a duty-free commodity.

The merchants on Levinsky Street, a warren of dried fruit and nut stands in Tel Aviv, contend it's a matter of taste.

"It's no secret," says Moshe Mussafi, a wholesaler who advertises California pistachios in his office. "The taste (of the Iranian nut) is better."

In Iran, pistachios have grown wild since biblical times. Persian kings visiting Egypt brought pistachios to their pharaonic hosts. Today, they represent the country's third-largest export. A fungus crippled last year's crop, but in years past, Iranian pistachios earned $700 million in a year .

Before the shah fell in 1979, Israel regularly imported Iranian pistachios. Then a revolution spawned a militant Islamic republic, followed by the United States' policy of isolation. Israel, too, outlawed trade with Iran.

California's first pistachio trees were planted in the 1930s as an experiment to find a crop suitable to the high desert climate of the San Joaquin Valley. The commercial industry took root 30 years later. The output is 180 million pounds, more than Iran's. American growers have about $1.2 billion invested in acreage and processing plants.

Last May, Israeli customs charged one of the largest importers, Hamama Brothers & Co., with illegally importing 104 tons of Iranian pistachios between September 1994 and January 1995. Customs accused Hamama of buying the Iranian pistachios from a German supplier and trying to pass them off as American.

Meir Hamama, director general of the firm, denies it all.

"A pistachio doesn't have an identity card," Hamama said. "No Iranian pistachios reach us from Iran under any circumstances."

Copyright (c) 1998 Seattle Times Company, All Rights Reserved.

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