It's no more racist than calling France the country of the French, America the country of the Americans, etc, and that's what Israel was intended to be - the country of the Jews. Let's not forget that Saudi Arabia bans Christianity and Christians are fleeing the Palestinian territories due to Muslim persecution, while Israel offers complete freedom of religion. However this is an idiotic move by and idiotic PM, and it will be overthrown when he is.
Palestinian youths throw stones at security forces in Shoafat, E. Jerusalem; none injured (Haaretz)
from the article: Loyalty oath proves Israel is racist, say Israeli Arab leaders