Ridiculous argument. Jews living in Germany CONSIDERED THEMSELVES GERMANS. Muslim Arabs living in Israel consider themselves MUSLIM ARABS: PATIENT MUSLIM ARABS
"German" is a nationality description as is "Israeli" or "American" or "Jordanian".
"Arab" is an racial-ethnic group description as is "Slav" or "Aborigine".
"Muslim" is a religion as is "Jewish" or "Catholic".
Is it your contention that people of certain ethnic groups or religious groups can never be loyal citizens?
Is that not exactly what those Germans in the 1930's who wanted to rid Germany of the "Jewish problem" said about all Jewish German citizens?
Did they not claim that a person could not be a Jew and a loyal German at the same time?
If there is a particular Arab Israeli citizen that the State of Israel feels is a traitor, the State of Israel needs only to escort that traitor to the opposite side of the Israeli Wall.