The liberal left in Israel have never been happy about the idea of the country being a " jewish state " they want a more politically correct modern all embracing country especially as for the most part the country is secular anyway. The problem the liberals have always had though is the peace process has had to take priority in their ideology but if they create a palestinians state best target will be the idea of a Jewish state. The arabs in Israel have never recognised Israel as being a Jewish state and parties like Hadash have openly campaigned to change that. Now the government is talking about making it Basic Law and if its in the Basic Law it would take about 75% of the Knesset to vote to change it ruining their dream of a politically correct non jewish country. The arabs of course are against it because once the palestinians state is created the best battle the entire arab world will want to fight is the concept of a Jewish state change try get the world to force Israel to become a religion neutral country which is why the Arab League are against recognising Israel as a Jewish state because if they do that battle against Jewish state identity can never be fought. What Bibi is trying to do is protect the Jewish state identity before the liberals and arabs can begin their campaign to change it. Its certainly not racist because Israel has always defined itself as a Jewish state anyway all this is doing is enshrining it in law.
Macedonian army starts building fence on Greek border (Reuters)
from the article: PLO official: Netanyahu using Jewish state law to bury peace
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