But what about peace among Israeli citizens?

A panel in San Francisco last month examined how Israelis are slowly moving toward peaceful coexistence within their country, where the population is about 81 percent Jewish and 19 percent Arab.

The panel of two Jews and three Arabs concluded that some important steps are being taken, but mainly on a grassroots level, and that it's only a start.

For the most part, Arabs remain second-class citizens in Israel, and peaceful coexistence remains a shaky concept.

"We're talking about a difficult situation. We have a very conflicted society," As'Ad Ghanem said during the 90-minute dialogue in the board room of the S.F.-based Jewish Community Federation.

An audience of about two dozen, including members of the JCF's Israel and overseas funding committee, quietly munched on a tasty lunch of falafel, tabouli and hummus as they listened.

"We just want to be included as full citizens," Ghanem told the group. "But that's the question. How can Arabs be full citizens?"

Ghanem is co-director of Sikkuy, a 9-year-old organization that's trying to even the playing field for Arab Israelis. It has received funding from JCF, including a $50,000 grant in 1998.

"Arab citizens do not feel as if they are partners in civil society," said Shalom "Shuli" Dichter, the co-director of Sikkuy. "They do not feel as equal and as belonging as the Jewish citizens."

The Israeli-based Sikkuy is doing a variety of things, such as pushing Arab citizens to higher positions in civil service.

Sikkuy also undertakes demographic research. One recent study showed that in the Arab-dominated Nazareth area, Arab businesses and municipalities held only one acre of space for every nine acres held by Jewish enterprises.

"It illustrates that the allocation of resources in the country, especially those for making a living, is a vital element — and in that sense, the state of Israel is in trouble."

Dichter said his agency is one of more than 130 organizations and programs in Israel promoting Arab-Jewish coexistence.

Another one is the Center for Jewish-Arab Education in Israel.

The 3-year-old agency has launched an innovative elementary school program, with classes being taught by two teachers, one Jewish and one Arab. The curriculum is bilingual and bicultural.

One of the schools received $35,000 last year from JCF.

Co-founder and co-director Lee Gordon told the audience that his schools provide a quality education not available to most Arabs.

"There is a severe disparity in budgets and allocations to Jewish vs. Arab schools," said Gordon, a native of Portland, Ore.

"There are Arab schools in Bedouin communities, for example, that don't have electricity or running water."

Moreover, Gordon added, his schools strive to remove barriers between Jewish and Arab children.

"The average Israeli Jew has never met an Arab or had a conversation with an Arab even though they're 20 percent of the population," he said.

Ghanem, the Sikkuy director, remained skeptical of true change.

"The main thing that has to be changed is the state policy," he said. "Arabs in Israel were chosen to not be in the mix."

In addition to blaming the Israel government, Ghanem said Arabs themselves are to blame.

"Arab citizens are very weak. They cannot reach equality," he said. "There is not community there. There are families that live alongside one another, but there is no real community."

Said Gordon: "I don't think that the alienation of Arabs can ever be reconciled 100 percent. But I do think there is a tremendous amount that can be done."