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In Israel鈥檚 Declaration of Independence in May 1948, the nation鈥檚 founders laid out a vision for a state that would be both Jewish and democratic.

Today, a fierce constitutional debate over whether the government is about to enshrine into law Jewish over democratic values is at the core of a coalition crisis that analysts and politicians say is on the verge of bringing early elections.

But, even if the crisis is resolved at the last minute, the debate itself is threatening to further alienate Israel鈥檚 minority of Arab citizens, tarnish its reputation as a democracy, and erode Israel鈥檚 ties with Western allies.

At issue is Prime Minister Benjamin Netanyahu鈥檚 鈥淣ationality Law,鈥� a bill to elaborate on and enshrine Israel鈥檚 Jewish character as a quasi-constitutional 鈥淏asic Law.鈥�

While Mr. Netanyahu and his right-wing coalition allies say the bill is necessary to buttress Israel's position as a Jewish state, critics ranging from Netanyahu鈥檚 hand-picked attorney general to key Israeli allies abroad like the Anti-Defamation League, an American Jewish civil rights organization, have said it breaks with precedent by elevating Jewish values while weakening Israel鈥檚 much touted democracy.

鈥淚 know that some of my best friends oppose the nationality bill鈥�. I don鈥檛 pretend to know what [David] Ben-Gurion would have said today,鈥� Netanyahu said in a ceremony at the gravesite of Israel鈥檚 first leader as the debate played out last Thursday. 鈥淲hen Ben-Gurion declared the establishment of the state, he didn鈥檛 see the need to legislate Basic Laws to ensure its Jewish and democratic character鈥�. Now there are those that are challenging the state of Israel鈥檚 Jewish character 鈥� and there are many doing it.鈥�

Years ago Netanyahu introduced recognition of Israel as a Jewish state as a key demand in peace talks with the Palestinians. Those talks collapsed in April.

Israeli Arabs see law as 'racist'

Minutes before the prime minister spoke, former President Shimon Peres, in his youth a loyal aide to Mr. Ben-Gurion, attacked Netanyahu and the bill for unnecessarily upsetting the careful balance between democracy and Jewishness that Mr. Peres said the country鈥檚 first prime minister labored to establish.

The Israeli Arab civil rights group Mossawa called the bill a piece of 鈥渞acist鈥� legislation that would formalize the Arab minority, who account for a fifth of Israel鈥檚 population, as second-class citizens. 鈥淭his law is aimed at increasing tension between Jews and Arabs,鈥欌�� Mossawa director Jafar Farah said in a statement.

The bill鈥檚 opponents include coalition moderates such as Justice Minister Tzipi Livni, who has posted an image on her Facebook page of a Declaration of Independence scroll, and Finance Minister Yair Lapid, who was quoted as saying the bill is anti-democratic and runs against the spirit of Ben-Gurion.

Even Abe Foxman, the long-time director of the ADL who rarely breaks with the policies of Israel鈥檚 prime minister, echoed Israeli critics by saying in public that the bill is unnecessary. Economy Minister Naftali Bennett, who leads the pro-settler Jewish Home party, came to Netanyahu鈥檚 defense, saying in an interview with Israel Army Radio that the law is an internal affair in which allies in the US should not intervene.

Loss of US Jewish support

But Mitchell Barak, an Israeli American public opinion expert, points out that the law puts Israel in danger of losing support among American Jews, who hold more liberal political values.

鈥淒emocratic values are extremely important to Diaspora Jewry and this goes against that,鈥欌�� he says. 鈥淚t鈥檚 hurting Israel internationally because Israel is being perceived as favoring one race or religion over another.鈥�

Indeed, for decades Israelis and their allies have hewn to a political philosophy that stresses Judiasm and democracy are in a symbiotic relationship predicated on their equality, a claim hotly disputed by the detractors of Zionism.

Though the Declaration of Independence contains the word 鈥淛ewish鈥� 20 times without mentioning 鈥渄emocracy鈥� once, the document vows to uphold a list of political values at the heart of liberal democracies, such as equal justice before the law without prejudice, civil rights, and freedom of religion, language and culture. The document also made an appeal to Palestinian Arabs to become full and equal citizens represented in the parliament.

A 14-point proposal put forward by Netanyahu does promise to aspire to a Jewish and democratic state in the spirit of the declaration but makes no direct mention of the Arab minority. Instead it refers to ensuring the rights of all its citizens under the law. While laying out the country鈥檚 Jewish symbols, it also says that the right to national self-definition in Israel is 鈥渦nique鈥� to the Jewish people.

After being approved by the Cabinet on Nov. 23, the sides averted a coalition meltdown last week when they agreed to table the date for a preliminary vote that would introduce the bill to parliament. Netanyahu and Lapid, who are also wrangling over the annual budget proposal, met Monday night to discuss ways to improve cooperation, and presumably reach some sort of compromise on the proposal. Initial reports suggest they failed.

Fallout beyond coalition crisis

Beyond the coalition crisis, the law has come to the fore as Israel is grappling with rising fear, enmity and violence between Jewish and Arab citizens over the handling of the recent war in the Gaza Strip and months of turmoil in Jerusalem.

Israeli Attorney General Yehuda Weinstein wrote in a legal commentary that the nationality bill would have fallout for the entire society as well as for Israeli foreign relations 鈥� the US State Department, the European Union, and the Palestinian Authority have all warned Israel over the legislation. The attorney general said that the law aims to 鈥渄ivide鈥� the values anchored in Israeli constitutional law, giving Jewish values prominence and detailed definition while reserving a more narrow place for democratic values.

Yedidia Stern, vice president of the Israel Democracy Institute and a law professor at Bar Ilan University, argues that Israel鈥檚 founders made a courageous move to offer Arabs full equality at a time when war appeared inevitable. Boiling down criticism of the current proposal, he says, 鈥淯nfortunately [the word] 鈥榚quality鈥� is not there.鈥�