From a distance I would guess this is not necessarily about being Jewish - by birth or by religion. It's about being one of the people of the state of Israel and explaining that by saying who is not one of the people (or not yet). Of course it's complicated via the law of return including people who are not technically Jewish, but who have privileged right to migrate and become Israelis. But this only occurs on the ground when are they accepted as one of the people of the land, rather than as some ethnic origin migrant who will only parent Israelis. It means an Israeli identity is being established separate from worldwide Jewish origins. That involves common agreement on what are vital national interests as well as attempts by the religious right and secular left to brand Israel with their own ideology (I support the latter). Sure nationalism can go bad and the attempt to brand the state of Israel a Jewish state is bad nationalism. The state of Israel fulfils its mandate to be a national homeland for Jews by being set up to receive Jewish migrants in an area where they would be the majority of the people, but it was required to and is still expected to treat all its citizens as equals.
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from the article: Is Judaism a race? Ask Israelis