If there's one issue that divides Germany and Israel, it's Iran.

"We have no other complaints with Germany. But this is a big complaint," Israeli Consul General Nimrod Barkan said.

He made the comment to a packed audience for a panel discussion on German-Israeli relations at San Francisco's German Consulate Wednesday of last week. The event was co-sponsored by the consuls general of Israel and Germany and the American Jewish Committee.

The conflict focuses on policy towards Iran: The United States and Israel bar trade with the fundamentalist Islamic regime in attempts to isolate it, while Germany and other European nations trade with Iran and pursue a dialogue with its government.

"I believe Germany really thinks this will work," Barkan said.

German Consul General Ruprecht Henatsch, however, said this policy difference between Germany and Israel was mainly a debate over pragmatic approaches. The countries both see the dangers emanating from Iran — including state-sponsored terrorism and a growing war machine.

"Nobody is naive about that," Henatsch said. "Everyone sees what that regime wants to do."

Henatsch was less sure about predicting the results of Europe's current dialogue with Iran. Germany's position, however, is that backing Iran into a corner probably won't change its behavior, he said.

In Henatsch's own experience dealing on a personal level with the Iranians, "They were nasty fellows and unpleasant to talk with."

On other issues, the diplomats agreed, Germany and Israel are more closely aligned. The two nations began building bridges in the 1950s, when both countries still stood in the shadow of the Holocaust.

Starting with the agreement in 1953 for Germany to compensate Holocaust victims, rapprochement led to dialogue, and dialogue led to cooperation, Henatsch said.

Germany is now Israel's second biggest supporter and trading partner after the United States. Germany has also been a major supporter of the Middle East peace process, and is Israel's leading proponent in Europe.

Currently, Germany is helping Israel and Jordan with a water desalinization project.

"There is no doubt Israel owes a debt to Germany," Barkan said.

"That it's still possible to bridge Jews and Germans" even as both retain the memories of Nazi crimes "is one of the great accomplishments of the last 50 years," Henatsch said.

It was not an easy road, according to panelist Donald Abenheim, a professor at Stanford's Hoover Institution. The initial rapprochement between Israel and Germany was unpopular on both sides.

Israel's decision in the 1950s to rebuild relations with the Germans was purely pragmatic, Barkan said.

Israel's first prime minister, David "Ben-Gurion, said it was a new Germany," Barkan said. "But really, he knew it was a new Israel," a fledgling country seeking aid.

"Without Germany," Barkan added, "there would be no Israeli economy to speak of."