The Arab deputy speaker of the Knesset who was recently acting Presaident of Israel served many years in the Israeli military. No Arab is excluded from the Israeli armed forces, BUT no Arab is conscripted because it would be unfair to expect them to fight their own relatives on the other side. The Israeli Declaration of Independence makes it clear that Israel is a Jewish state in which ALL citizens have legal equality. This is similar to England and many European countries which have a Christian tradition but have citizens of other faiths.
Justice Ministry: Information examined by AG about Gal Hirsch didn't come from police (Haaretz)
from the article: Poll: 50% of Israeli Jews support state-backed Arab emigration