From what you say, I take it that Jews can't move into Palestinian villages becuase the people there would react aggressively. This is bad, but not the same as the government enforcing racism. It is hard and takes a long time to change the hearts and behavior of people, but the process cannot even start as long as racism is institutionalized. No country in the world should do business with Israel or Israeli companies until legal, institutionalized, racism is eradicated. I grew up in the US south before and during the civil rights movement. I have watched my own country struggle and fight, with the government eliciting harsh reaction from some for refusing to continue racist practices. The law has to change first. Unfortunately, Israelis dont seem to see a problem with racism against non-Jews, but God help anyone they think is being racist to a Jew. Racism is racism. It is no better or worse depending on the race of the actors.
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Clashes between IDF and Palestinians in Joseph's Tomb after Jews pray at site; none hurt (Haaretz)
from the article: Jewish town won't let Arab build home on his own land