The fundamental issue is the population of the West Bank, who, outside of Palestinian Authority areas (aka "Area A"), are largely controlled by Israel but cannot vote. Note that 1-2 million West Bank Palestinians live in Area A under the Palestinian Authority.
- Within Israel, there is a Communist Party (which rejects religion and ethnicity) and other parties (including two Arab parties).
- A key problem in Israeli democracy, which it would be helpful if you noted, is that although there are two Arab parties (and majority Jewish parties who welcome Arabs), the Arab population of Israel votes at a low rate. This results in their being under-represented in the Knesset.
- The Basic Law you refer to made zero change to who can have political power.
- The 50% you refer to is neither the right percentage, nor does it take into account areas of great Palestinian autonomy.
- Function of the legal system has never been relevant to who can vote or hold office.
If you want to reflect what is on the ground, I suggest you take in the whole picture.
The Basic Law which passed with 62 for and 55 against, just states what the constitution of pretty much any European country does. Most European countries are nation states. It's countries like Switzerland, Russia and Belgium which are outliers. (Hopefully, one day, they will be broken up too.)
- whose Basic Law 2018 declared it a Jewish supremacist state
- where 50% of the population doesn't have the right to vote, land ownership, or travel on the same roads
- and faces 99% conviction rates in military, not civil, courts
- where parties can be banned directly by government decision if it arbitrarily deems them to be anti-Jewish