Even as President Obama flexes American muscle to ratchet up efforts to reach an Israeli-Palestinian peace agreement, the relationship between Israel’s Jewish and Palestinian-Arab citizens remains the central domestic challenge facing Israel, where closing economic gaps and advancing coexistence and reconciliation are important pre-conditions to fostering a climate of peace in the region.

Some contend that Israeli-Palestinian peace will in itself resolve the longstanding tensions between Israel’s Arab and Jewish citizens. This is, at best, a case of wishful thinking, and a dangerous distraction from the need to address the pressing challenges of equality and tolerance within Israeli society.

On the contrary, fulfillment of Palestinian national aspirations in Gaza and the west bank will only strengthen Palestinian national identity among Israel’s Arab citizens, raise their expectations, and increase international attention on Israel’s internal challenges.

Israeli Arabs are already worried about the negative consequences of peace; most disturbing, the no longer unspeakable possibility of involuntary land transfer of important Arab population centers in the north of Israel in exchange for annexation of large Jewish settlement blocks in the west bank. Such a land swap, part of the harsh political discourse in the last Israeli election campaign, might easily emerge as a viable negotiating option, despite being vigorously opposed by a vast majority of the Arab citizens of that area.

Surely, peace would also bring benefits to Israeli Arabs. As in the post-Oslo period, Israel’s Arab community would likely enjoy the economic benefits of joint, cross-border business ventures and partnerships, and the end of violent conflict might contribute meaningfully to an improved atmosphere for Jewish-Arab relations within Israel.

Nevertheless, at the bottom line, peace with the Palestinians will likely exacerbate the already high level of tension between Jews and Arabs within Israeli society — tension that erupted into deadly violence in October 2000. A state commission of inquiry laid responsibility for the violence, in large part, on “generations of governments [that] failed to show sufficient sensitivity to the needs of the Arab population, and to do enough or try hard enough to create equality and to uproot discrimination.”

Understood in the context of growing socio-economic gaps and an expanding Islamist movement, and with land and collective rights issues on the ascendancy, Israel must address the status of its 20 percent Arab minority with unprecedented urgency.

The Abraham Fund has been working for 20 years to strengthen relations between Israeli Jews and Arabs and to lower the barriers to full inclusion and equality. Much of that historic work has been at the grassroots level, to promote understanding and support collaborative action. But bolder, more ambitious strategies are required today in order to address the root causes, and growing risks, of a deteriorating status quo.

The goal today must be wide-scale reform and transformation of society’s major institutions: national and municipal government, the educational system, law enforcement and the security services, business, media, arts and culture, and academia. It is why future efforts must be focused on national initiatives that are already beginning to re-shape reality:

• initiatives to address the root manifestations of discrimination and inequality in employment, in distribution of government resources, and in land allocations;

• initiatives to mandate the teaching of Arabic language and culture in all Jewish schools, beginning at an early age;

• initiatives to transform the way the Israel police and major branches of government interact with and serve the Arab citizens of the state; and

• initiatives to promote Jewish-Arab cooperation in business, education, and civil society within Israel’s growing number of mixed cities and regions.

Building a shared society for all of Israel’s citizens will require no less than building a new civic culture among Jewish and Arab Israelis. The time is critical to create a national mobilization — a partnership of national and local government, civil society, business and community leaders — to begin to address these issues in the manner required. Here is what will be needed, and what such a mobilization might accomplish:

First and foremost, Israeli leaders across party lines must remove this issue from the political agenda, and shift the status of Israel’s Arab minority, and the future of Jewish-Arab relations, to the mainstream of Israel’s social agenda.

Government must create a strong central authority for equality and coexistence to provide consistent leadership, to monitor the enforcement of existing laws and regulations, and to assure the participation of Israeli Arabs in the formulation of policies that affect their lives.

The state must commit to a significant realignment of spending priorities to narrow the glaring and well-documented gaps between expenditures on behalf of Israel’s Arab and Jewish citizens. Such realignment must include comprehensive reform of the Arab-sector educational system; equalizing allocations to Arab municipalities; improving the quality of public services delivered to the Arab community; and creating incentives for investment in Arab sector development, business, and job creation.

Israel must expand its efforts to legitimize the language and culture of the Arab minority in schools, in government, and in the media and the arts, a critical component of constructing a culture of diversity and mutual respect.

Finally, Jewish and Arab Israelis from all walks of life and sectors of society must initiate a serious national dialogue on the future of Israeli democracy, including a conversation about the rights and obligations of shared citizenship.

The benefits of such a national mobilization are clear:

• economic productivity and self-sufficiency for Israel’s 1.6 million Arab citizens — men and women locked in a cycle of poverty and high unemployment with the potential to contribute much more to the economic, scientific, and cultural vibrancy of the state;

• engaging Israel’s Arab citizens as ambassadors for partnership with the Arab and Muslim world. Both in symbol and substance, there can be no meaningful cross-border business ventures, academic relationships, and cultural exchanges without the active participation of Palestinian-Arab Israelis.

No less important, Israel has the opportunity to create an aspirational model of tolerance, pluralism, and democracy for countries of the Middle East, and for conflict zones around the globe.

Learning to live with our next-door neighbor is a precondition for living with our neighbors across the border. Investing in building a culture of coexistence, opportunity, and equality among Israel’s Jewish and Arab citizens is an investment in the security of the State of Israel, and needs to matter to all those Israelis, and friends of Israel abroad, who are committed to Israel’s peace and prosperity.