Citizen Arabs: The Neglected Residents of Israel ; A Recent US Report Accuses Israel of Systematic Bias against Israeli Arabs

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Compared with some of its neighbors, this dusty city is decidedly down at the heel. Tired-looking palm trees line pocked, litter- strewn roads. The view makes sense, given Taibe's dubious claim to fame as the first Israeli municipality to declare bankruptcy.

But that was two years ago. Things here have gotten much better. Schools are being built for the first time in 11 years. Homes on the city's eastern side now have running water and city workers get paid.

Taibe had corruption problems, but according to the mayor who turned things around, the biggest hurdle was - and remains - the fact that it is an Arab city in an Israeli state. That claim is bolstered by a new US State Department report that describes a wide swath of discrimination Israeli-Arabs face from their earliest school days to the workplace and beyond.

In doing so, the report indirectly highlights the twofold difficulty Israel has in living up to its self-image, outlined in its Declaration of Independence, as a "Jewish and democratic state."

The report also comes at a time of increasing tension over the expropriation of Arab lands for highway construction and the demolition of homes built without permits which Arabs say are almost impossible to get.

There were large demonstrations last week to protest both issues, and angry comments from Arab members of parliament. Prime Minister Ehud Barak recently told a committee discussing the issue that Israel's Arabs are "citizens loyal to the state who have always worked very hard under long-standing subjugation."

The State Department's annual report on international religious freedom says there was no change in its evaluation of Israel over the past year. The report proposes no suggestions or penalties, but baldly describes widespread inequities.

The tough language is not new for the two allies, says Lewis Roth of the Washington-based group Americans for Peace Now: "Even though Israel is seen as pretty close ally, the US has never pulled punches at leveling formal criticisms."

Israeli government officials were unavailable to comment on the report.

For gravelly-voiced Taibe Mayor Esam Masorwah, the report simply sums up what everyone here knows. "There are no equal rights for Jewish municipalities and Arab municipalities," he says. "Government ministers say it, even politicians admit discrimination. They all say we must correct it, but nothing ever happens."

One indicator bears him out. Taibe with a population of 29,000 has an annual budget of roughly $15 million, according to Israel's Interior Ministry. A nearby Jewish-Israeli city with 10,000 residents has a $12 million budget. …