About 20 supporters mainly comprising the Hasid family and some of their friends gathered on Wednesday in an upscale Jerusalem neighborhood and cheered for a team that most Israelis consider a representative of their arch-enemy.

Israel has long been locked in a shadow war with Iran, which supports Islamist militants in the Gaza Strip and Lebanon and whose nuclear programme is widely believed to have been targeted by Israel's intelligence services.

But Tzion Hasid, 84, a prominent member of Israel's Iranian community and a Jerusalem building contractor, who came to Israel from Isfahan in 1966 with other family members, said that despite the political enmity between the two Middle Eastern powers, Israelis of Iranian origin felt great affection for their former compatriots.

"I came from Iran to the land of Israel, the land of our dreams, but not even for one moment in over 60 years have we forgotten our (old) country," Hasid said.

"We still have feelings of respect for all Iranians. We want peace with them and we hope that even next year, our (Israel's) leaders and theirs will meet and make peace for the benefit of both our people."

Israelis of Iranian origin number between 350,000-400,000. Many emigrated in the 1920s, 1950s, and 60s and some came after the Islamic Revolution of 1979, said Pierre Lavi, 53, a Jerusalem author and publisher.

Regardless of Iran's underdog status in the match, and even after they went 1-0 down to Diego Costa's 54th-minute goal which sealed the win, the group continued with repeated chants of "Iran, Iran".

The clapping and singing by the gathering of the older generation who were born in Iran and came to Israel in the 1960s was backed up, although not as vehemently, by younger generations who were born in Israel.

Lavi, who was brought to Israel as a four-month-old baby by his parents, admitted quietly that he was a supporter of Spain. "Just don't tell the others," he whispered.

"The football is a way to remember what they miss about Iran but I don't think they are really fans of the Iranian team, perhaps some are, but not all of them," Lavi said.

REUTERS