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Pálinka is a fruit brandy. Basically, the fruit is fermented then distilled (the 'pál-' root is borrowed from the Slavonic language group and means to burn, ie. distil). Water is only added to maximize the balance of flavour and strength, so most of these spirits are about 55-60%.
It must be made from fruit, so vodka, whiskey, gin, tequila etc cannot classify as pálinka.
There's a clear definition on this wikipedia page:
http://en.wikipedia.org/wiki/Palinka
