Israel: Democracy and dictatorship

One of the founding myths of the Zionist discourse is that Israel is the only democracy in the Middle East. Of course the debate on whether or not true democracy is possible under a capitalist economy is still valid here. However, I do not intend to enter into generalisations in political philosophy. What I intend to do is to examine the thesis itself and test its validity.
On a superficial level, Israel strongly portrays the basic elements of a modern western style democracy. Its leadership is elected by public suffrage where even citizens from the minority group have equal voting rights. The Israeli press is one of the most vibrant worldwide, it can discuss and criticise the government at will. State institutions are fully functional. The government answers to the Parliament which in several occasions dissolved the government and called new elections. The Judiciary is seemingly independent, any citizen can call the state to court on virtually any issue.
At this level Israel seems, and acts like a democracy. However, to many of us Palestinians, whether with Israeli citizenship or not, it feels like a military dictatorship. Arab press, even those inside Israel, is subject to the censorship of the army. The Israeli Arab educational system is supervised by the security services. Arab towns (inside Israel) are scoring at the bottom of the economic development lists.
In the West Bank and Gaza it is even worse. Palestinians are not considered citizens. The Army is not responsible to anyone. As a matter of fact, the army is responsible for administering the territories. Destruction of property, curbs on civil and political liberties and even murder of Palestinians by the Army are not punishable.
The question that might be raised here is why can Israel look so democratic and yet feel like a military dictatorship to us? I think I have the answer.
There is one institution in the Israeli society to which the overwhelming majority of Israeli Jews have sworn loyalty to- The Army. Almost every Israeli serves in the army pledging to sacrifice his/her life if need be. Even though the Army is seemingly outside the political scene, it extremely influences it. The current government (before Barak was admitted), was the only government where both the Prime Minister and Minister of Defence did not come from the Army. The majority of decisions taken by Israeli governments are influenced by reports and recommendations from the Army or other security services and intelligence organisations.
To protect their power, the generals and the state have placed one constraint on Israeli democracy: Zionism. In Israel you can do and say anything as long as it does not impact “the Jewish nature of the state.” It is such a cute democracy until you trigger the beast of military dictatorship when you attack this principle. Then, the individual or the group which has triggered this threat will suffer just as the dissidents of Saddam, Assad or Pinochet. In such a case, the public is not affected. What is worse, the public is complacent with the acts of the states. After all, this is what they have sworn allegiance to when they were 18.
The Army acts in a similar manner to the Council of Guardians of the Islamic Revolution in Iran. Democracy is allowed as long as it does not endanger Zionism. The Army itself acts as a huge brain-washing machine. Youths join the army at an age in which they begin to explore life and understand it. At this critical age, they are given guns, and request to pledge to devote all of their strength and to sacrifice their lives to protect the land and the freedom of Israel. They are given extensive training in patriotism and Zionism to the extent that they are blinded from seeing any truth that contradicts the version they learnt in the army. This way, the Israeli army created a society which is loyal to it. The Army is probably the most respected public institution in Israel.
Military dictatorships usually spring up when the power of the military can be compromised by democracy. In Israel, the population generally does not find itself in that position because the majority is, by default, a part of the army. Those groups who are not are being increasingly criticised for their disloyalty.
Israel does not need to be a military dictatorship, it is a military democracy!