There's an interesting piece in The New Republic by Yossi Klein Halevi. It's on Arab Israelis who fly the Islamic flag and want to remain part of Israel. The article is only available by subscription, so I give a lengthy excerpt here:
Prime Minister Sharon's announcement of unilateral withdrawal from Gaza has obscured his other, no less stunning plan to cede the Triangle, the overwhelmingly Arab area parallel to Israel's coastal plain whose largest town is Umm El Fahm. That would mean withdrawing from territory within the pre-1967 borders and stripping some 200,000 Arabs of their Israeli citizenship - problematic under international law and vehemently opposed even by those Arab Israelis... whose loyalty to Israel is questionable.(Hat tip: Matthew Kramer.)
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For Jews, there is no place within pre-1967 Israel more frightening than Umm El Fahm, a neglected and overcrowded town of almost 40,000, with potholed roads and nonstop traffic jams on its narrow main street. Green Islamic flags hang from balconies and street lights, while banners proclaim we are all the islamic movement - that is, the Islamist party headed by the imprisoned Sheik Salah and cited by the Shin Bet as a threat to the country's security. Every September, tens of thousands of Islamic Movement supporters gather here for a rally under the title, "Al Aqsa Is in Danger," spreading the baseless fear of an Israeli government plot to destroy the Temple Mount's Islamic shrines...... [W]hat's most disorienting about Umm El Fahm these days is the widespread affirmation of Israeli identity that one hears in response to Sharon's proposal. Despite anger at their second-class status, many residents insist they prefer to live in a Jewish state rather than a Palestinian one. Partly, the reason is economic. "You want to take us from one of the most advanced countries and put us in one of the most depressed?" says Walid Mahajni, owner of a pastry shop located on a service road with piles of uncollected garbage. But, he adds, his attachment to his Israeli passport isn't just financial. "The Israeli mentality has become part of us. When I traveled in Egypt and Jordan, I realized I couldn't live in an Arab country. We've gotten used to speaking our minds."
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[S]ome insist that support for the Islamic Movement results largely from pragmatic, not ideological, motives: The Islamic Movement provides services that compensate for the government's discriminatory policy against Arab municipalities. End the discrimination, they add, and the Movement's appeal will decline. "The government created the Islamic Movement," says Mahajni, the pastry shop owner. "Give people equality and the Islamic Movement will decline, just like the [ultra-Orthodox party] Shas."...The proposed severance of Umm El Fahm from the Jewish state raises basic questions about Israel's future relationship with its Arab citizens, with the Middle East, and with its own territorial integrity. The very threat of rescinding Israeli citizenship could have a deterrent effect on growing extremism among Arab Israelis by emphasizing that Israeli citizenship requires basic loyalty, especially as a Palestinian state emerges just over the border. Yet ceding the Triangle could deepen the alienation of Arab citizens, one of the few populations left in the Middle East with whom Jews still have a chance for dialogue. Finally, given that the birthrate of Arab Israelis is more than double that of Israeli Jews, will Israel then withdraw from any part of its territory in which Arabs predominate - say the Negev, where Bedouin are already becoming the majority population?
In the village of Mualaka, near Umm El Fahm, hidden in a valley with almond trees in white bloom, two dozen young men sit on folding chairs in the midday sun. Like Umm El Fahm, green Islamic flags fly from balconies. When I ask the men about Sharon's proposal, the response is uniformly negative. "Give me all of Nablus, even with oil wells, and I won't give up my Israeli citizenship," says a bearded young man named Ghanem. The others laugh and nod in agreement. Adds Faris, "I want to live under the democratic law of Israel, not the law of [Yasir] Arafat. If you want to get rid of us, create a separate state of the Arabs who stayed here in 1948. Just don't send us to Palestine." Says Adel, "I've worked with Jews for twenty years. How can we live without Chaim and Dudu and Shmulik?"