In different circumstances, the Zefat Academic College in the northern town of Safed could have been a poster story for successful integration between the Jewish and Arab communities in Israel.
The college, operating under the auspices of the Jewish and religious Bar-Ilan University, offers a wide range of degrees in desirable fields, including law, to a predominately Arab student population. There are now plans to start a new school of medicine together with the local Ziv Medical Centre. For aspiring lawyers and doctors of the neighbouring Arab villages who cannot study far away from home, the college is ideal and over 70 per cent of the students are indeed Arab.
But for the past few months, the college and the entire town have become the focus of one of the ugliest Jewish-Arab conflicts in the country. The chief rabbi of Safed, Shmuel Eliahu, has ruled that Jewish flat-owners are forbidden from renting lodgings to Arab students. The rabbi cites both his interpretation of halachah and the fear that the students may be agents of terror and disrupt the Jewish atmosphere of the ancient town.
In the town, which is rapidly becoming more and more religious, the mayor has been reluctant to condemn the influential rabbi, while distancing himself from the ruling. Neither are all the citizens in favour, but few have defied the pressure from the rabbi's followers. As a result, at the start of this academic year, many Arab students were forced to commute from their homes. Along with a scarcity of lodgings, there are also reports now of shops and restaurants refusing to serve Arabs.
"Safed is not an isolated case," says Fadi Abu Younes, the chairman of the National Arab Students Union, "it is only the most prominent one now. You hear rabbis and politicians saying similar things in other towns."
Despite the media attention, he actually believes that the situation in the town can easily be resolved. "We have had good meetings with the mayor and with the college president," he says, "and there are plans to locate dependable lodgings for Arab students and also improve transport between the town and the Arab villages. I believe we can marginalise the racist minority."
But Mr Younes has a wider concern for Israeli society as a whole. "It is not just the racist legislation that is being proposed in the Knesset, it isn't even just the anti-Arab feeling. There is a growing wave of intolerance that is sweeping the country, affecting also Jews. We saw it in recent months in the growing voices to push left-wing professors out of universities."
Many today share Mr Younes's view that the Jewish-Arab rift is not simply a conflict between two communities. Jafar Farah, director of Mossawa, the advocacy centre for Arab citizens, based in Haifa, believes that "political interests are exacerbating the tensions between Jews and Arabs to prevent a breakthrough in the peace process. Other than that, I don't see any concrete reason for this anti-Arab atmosphere. If you walk around Jewish and Arab areas on any given day, you feel a much less radicalised atmosphere than is reflected in the political debate and in the media. But meanwhile, the deputy prime minister, Avigdor Lieberman, says from the UN podium that Israel should redraw its borders and swap populations so that Israeli Arabs will be part of the Palestinian state. I know that most of the Jewish population are not in favour of that but that is the discourse of the political elite."
The Mossawa Centre has published its annual reports on the civil rights of the Arab community and on their financial situation, but even without the figures pointing a wide gap between the Jewish and Arab communities in just about every category, no-one could argue that this was a good year for Jewish-Arab relations.
For the Arab leadership, the worst development was what they see as a growing attempt by right-wing politicians, many of them government ministers, to push through the Knesset legislation that "delegitimises" Israeli Arabs. Among the laws is one requiring new citizens to pledge loyalty to a "Jewish and democratic" state, recently approved by the government, and a law allowing local councils to hold "admission committees" for new residents, a measure widely seen as designed to keep Arabs out.
But despite all this, Mr Farah actually sees some reasons to be optimistic. "In many ways, the gaps are growing," he says, "but there is some light. In 2003, Benjamin Netanyahu, as Finance Minister, said that the Israeli Arabs do not want to work. Now the government is beginning to refer to the community as an important economic entity.
"Many private businesses are not waiting for the government. The industrialist Stef Wertheimer, who came to the Galilee 20 years ago to set up Jewish factories and towns, has since realised that the Arabs don't want to kick him out and he is now investing $20 million of his own money in a new industrial park in Nazareth. You could certainly say that there is a dissonance between the political and what is starting to happen on the ground."
Mohammad Darawshe, joint executive director of the Abraham Fund Initiatives, a foundation dedicated to furthering coexistence between Jews and Arabs, says that this is "one of the worst years for relations between Jews and Arabs and it ends a very bad decade. It seems as if a chasm has opened between the state and its Arab citizens." But he also sees some new glimmer of hope. "On a communal level, there are the beginnings of dialogue," he says, "and there are improvements in economic integration, especially in the new openness of the civil service to recruit Arab employees."