the state is already defined as jewish and democratic, so anyone applying for the citizenship of such a state should have no problem in saying the loyalty oath explicitely. the oath will be applied to every new candidate regardless of race or country of origin, so it's not racist. it is meaningless, however, because those seeking the citizenship will stop at nothing. faking the oath seems a cheap price to pay.
US rally shows support for ex-Marine held by Iran on spying charges (AP)
from the article: Loyalty oath proves Israel is racist, say Israeli Arab leaders