It's not Israel's requirement of a loyalty oath that is the problem- it's the nature of the oath. Other (democratic) nations do not require an oath that swears loyalty to a certain ethnic or religious group. Now unless you want Israel to become a theologically-fascistic state like Saudi Arabia and Iran then surely you can see the distinction?
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Hostage-taking in French town ends, hostages safe (AP)
from the article: Loyalty oath isn't racist, but it will destroy Israel