World attention remains fixed on the Israeli-Palestinian conflict but a distinct, albeit related, conflict smoulders within Israel itself. It might be no less perilous. Jewish-Arab domestic relations have deteriorated steadily for a decade. More and more, the Jewish majority views the Palestinian minority as subversive, disloyal and – due to its birth rates – a demographic threat. Palestinian citizens are politically marginalised, economically underprivileged, ever more unwilling to accept systemic inequality and ever more willing to confront the status quo. Interaction with the Israeli-Palestinian conflict further complicates matters as negotiations bump against a core issue – whether Palestinians will recognise Israel’s Jewish character – that further inflames communal relations. There is no easy or quick fix. In the near term, Israel should take practical steps to defuse tensions with its Arab minority and integrate it into the civic order. In the longer run, the challenge to Israeli Jews and the Palestinian national movement is to come to terms with the most basic questions: what is the character of the state of Israel, and what rights should its Arab citizens enjoy?