[Editor's comment - in Haifa you can find some extent of coexistence between the two nations, the situation is much better than, e.g., in Jerusalem. But racism is on the rise everywhere in Israel as evidenced by the following article from a Haifa newspaper]
By Daniel Siryoti and Hadid Rashi
Yediot Haifa, 29.6.2007, p. 32
Translated by Yuval Yonay; the comments in  are his clarifications
'More than 80% of the students in Israeli higher-education system are Jewish… this fact is not felt on the Haifan campus… Students complain that extreme Arab students distribute materials on the verge of incitement/vilification ['hasata'; in fact, students need to give everything they distribute—even an invitation to an academic event—for approval by the Dean of students Office; sometime distribution is delayed because there is no one who knows Arabic available]. One student claims that Arab students create a militant atmosphere on campus, cynically using the freedom of speech. 'Students from Balad, Hadash and the Islamic Movement are involved all day in propaganda activities (hasbara) against what they call 'repression' (redifa). They walk on campus with shirts similar to military shirts [in fact, regular colorful T-shirts; the speaker probably alludes to the fact that dozens of students walk with the same shirt], carrying the images of Azmi Bishara [Balad students] and Che Guevara [Hadash students]. It creates an atmosphere of discomfort and intolerance,' the student says. The student tells that once he asked one of the Arab students, how the image of Che represents his views. 'The Arab students said that he had no idea, but that the very fact that Che was a well known revolutionary made him feel identification with the soon-to-come revolution. When I asked him what revolution, he refused to answer.''
'Some high officials at the university share this discomfort. 'It is hard for us to accept their political activities on campus,' says one top officer. 'It sometimes looks as if they have 'taken over' the campus, although they are a minority; one can see only them. . . last week I counted 6 distribution-tables spreading out materials in Arabic. I didn't see any table of a Jewish student group [last week was the election to the Arab Students Committee (ASC), and most of the activity was related to the struggle over the Arab voice; the results: 5 seats to Hadash, 5 to the first-time participating Islamic Movement, and 3 to Balad]. Unfortunately the university encourages this in the name of the freedom of speech, but it verges on cynical exploitation. With their shirts carrying the images of Azmi Bishara and Che Guevara they seem like soldiers on the eve of a battle [the similarity of what the anonymous official and the anonymous student said throws doubt on the authenticity of both cited quotes]. It's annoying, upsetting, and even frightening. Jewish students constitute more than 80% of the students-body [the rate is LESS than 80 percent although the exact figure is kept as a military secret], but their voice is hardly heard [one wonders why; are they repressed by the Arab-Palestinian students?] I wonder where the Students Union is. We often hear from students, employees, and even [the supposed to be leftist Palestinian sympathizers] that they feel as if the University of Haifa were a branch of Bir Zeit.'
'Wahid Askala, 3rd-year student [ex head of the ASC] . . . wonders what's bad with Bir-Zeit. It is a good university. It is our right to express our right, to pray, and even to have a prayer-room, exactly the same as Jews having a synagogue. It is our right to dress according to Islamic codes, and it is deplorable that people are persecuted due to their views and dress habits.' Similar view is expressed by Fadi Abu-Yunes, the head of the Students Office in Hadash. 'The problem is not the Islamization of the university but rather the Islamophobia of Jewish students and administrators alike. Talking against hair-covering and Muslim students is a sign of the fasciszation of Israeli academia…I don't understand where the fear comes from'… He argues that Arab students feel desperation exactly because freedom of expression and freedom of religion are denied…[he attributes the recourse to Islam to this feeling of desperation and frustration and demands either to allocate praying space for Muslims and Christians as given to Jews or to take out all religious spaces; in fact, the university has allocated a small space for Muslims earlier this year; interestingly, the reporters quoted 3 Hadash people but none of the Islamic Movement. Abu Yunes also mentioned that no Arab singer has ever been invited on Wednesday noon, when 45-minute shows are staged during the class break.] we are part of this institution; why should we feel like adopted children and like strangers in our own home?''
'The Students Union spokesman, Saar Ziv, rejects Askala's and Abu-Yunes' claims. 'What happens recently on campus is certainly unpleasant and a negative example of the tolerance the university stands for. The activity of the ASC does not represent the co-existence values the university tries to educate for, but regrettably the university allows it. Often we want to place a huge Israeli flag [where the actvists' tables are located] so it is clear who the majority here is…''
'Gil Mizrahi, formerly the Students Union's Treasury and nowadays [the town of] Nesher's spokesman, says: 'University of Haifa committed suicide 10 years ago by allowing Arab students under the aegis of the freedom of speech to demonstrate whenever they want, wherever they want, and under whatever slogan they wish, such as 'the PM is a murderer'' [in fact the ability to demonstrate is limited to one spot, to very few hours]. He adds: 'We, the Jewish students, have been told to keep quiet in order to prevent explosion, and we were not even allowed to hang the flag of Israel, and only due to a Court's decision, the Israeli flag is placed on campus [in fact, the Israeli flag has always been ubiquitous on campus; this story is very strange].''
'The secretary of Hadash, a graduate of the University of Haifa, Isam Mahoul responds: 'This is a racist approach. A person who describes the situation in this way is an outright racist, who must be stopped because s/he threatens and poisons the academic atmosphere…' Regarding Che Guevara shirts, Mahoul says: 'This is a call intended for all students to become revolutionary and to refuse to accept reality as it is. We act to make a deep democratic-revolutionary change in the Israeli society torn by corruptions, wars and occupation.''
The Head of the NGO to protect Carmel land, also a graduate of the university, Fahami Halabi [a Druz name] [calls to apply Tunisian regulations that keep all religious symbols, including Islamic codes of dressing, out of universities]. This will save academic institutions the need to struggle against the hostility expressed against those who are ethnically identified. U of Haifa is an institution in which human contrasts are conspicuous and eye-catching, and thus produces unneeded hostility [that is, if all Arabs disguise themselves as Jews, we won't have ethnic tension].
'The head of the maarakh tikshoret hasbara and doverut (I cannot translate this ingenious title invented by the U of Haifa, but it simply means the 'spokesman') Amir Gilat responded: 'U of H is proud of being pluralist university, believing in the freedom of speech, which means the right to say various things including such that are not agreed upon by the administration… The fact that both sides claim simultaneously that they are discriminated by the university … corroborates the fact that the university keeps the delicate balance…'.