The reason for his comment clearly stated. What is it all you dunces condemn him for? Is there something you can't understand about his reasoning? Is he supposed to wave the Israeli flag and proclaim how proud he is to be an oppressed second class citizen of the state of Israel? "The film technically represents Israel, but I don't". Simple as that folks. Pull your heads out!
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from the article: Ajami co-director ahead of the Oscars: I don't represent Israel