BRUSSELS - A new classified European Union report has warned Israel of becoming too Jewish and its effect on the progress of the peace process, the continued occupation of Palestinians territories and the deteriorated treatment of its Arab minority.
"The stalemate in the peace process, and the continuing occupation, inevitably has an impact on the identification of Israeli Arabs with Israel," a classified working paper produced by European embassies in Israel that was obtained by Haaretz newspaper said.
"It will be more difficult for Israeli Arabs to be wholly at ease with their identity while the conflict with the Palestinians continues."
The classified report was a result of discussions made by deputy heads of EU embassies in Tel Aviv who put forward their concerns in a 27-page-long internal report sent to the European External Action Service (EEAS) earlier this month.
According to a European diplomat involved in drafting the report, work on it began more than a year ago at Britain's initiative.
The idea was to write a report that could be debated by a forum of EU foreign ministers.
The report's conclusions were endorsed by all 27 member states. Yet, the recommendations were cut from the final draft because some EU countries objected to the content.
The document suggests that the EU discuss Jewish-Arab relations with the Israeli government, while stressing the government's obligation to bridge the gaps between the Jewish majority and Arab minority.
"We should emphasize that addressing inequality within Israel is integral to Israel's long-term stability," the document says.
It also warned of the effect of Prime Minister Benjamin Netanyahu's demand to recognize Israel as a Jewish state on the Arab minority.
Recognition of Israel as a Jewish state is one of Netanyahu's key conditions for any future peace agreement with the Palestinians.
The Palestinians have agreed to recognize Israel as a state but have rejected the further demand to recognize its Jewish character because it would amount to an effective renunciation of their cherished right of return for refugees from the 1948 Arab-Israeli war.
"We do not believe that recognition of Israel as a Jewish State should detract in any way from the vision of equality for all its citizens enshrined in its founding documents," the report said.
"It is in the interests of all Israelis to demonstrate that Israel is not only Jewish and democratic, but tolerant and inclusive, and that these are patriotic values. We believe in common with most Israelis that Israeli nationality is an inclusive concept which can accommodate equally those of other faiths and ethnic origins."
In response to the report, EU foreign relations spokeswoman Maja Kocjanic confirmed the text is authentic.
"It was prepared for us in order to reflect how we might engage constructively with government and non-government interlocutors in Israel when dealing with an issue identified in the EU-Israeli Action Plan [a 2005 bilateral treaty] as a shared value - the rights of minorities," she said, EUObserver reported on Friday, December 16.
Israeli Arabs, who make up nearly a fifth of the population, are descendants of those who stayed when hundreds of thousands of Palestinians fled or were driven from their homes by Zionist gangs in 1948, when Israel was founded on the rubble of Palestine.
Relations between Israel's Jews and Arabs have long been difficult, with Arabs complaining of discrimination.
The Knesset has further made life unbearable for Israeli Arabs married to Palestinians by adopting a law denying the latter the right to get an Israeli residency to live with their spouses.
Mohammad Darawshe, an Arab Israeli activist for the Jerusalem-and-New-York-based NGO the Abraham Fund, said that right-wing Jewish groups are steering the country "downhill" in terms of civil liberties.
"Israel's charter says it is 'Jewish' and 'democratic' but some Jews are trying to change the definition to make Jewishness the dominant factor," he said.
Darawshe described a new law passed in March - the Selection Committee Bill, which bans Arabs from buying or renting land in some 500 municipalities - as "ethnic cleansing."
"My family has lived in the same small town [Iksal] for 28 generations and I am never going to leave it for the sake of giving the Jews a 'pure' homeland," he added.