I don't think that Rugal got me here. I LIVE in Israel. I am Jewish and Israeli.
When referring to Israelis, you almost always refer to the Jewish population, since they are, after all, 75% of the country's population.
Besides, the Arab population of Israel rarely refer themselves as "Israelis", but prefer seeing themselves as "Palestinian citizens of Israel", or in the worse case, "Citizens of occupied Palestine". Obviously, I am not including the inhabitants of Gaza and the West Bank, which are outside the political borders of Israel and are referred to simply as "Palestinians".
Jews are both a religion and a nation, NOT a race. Jews are not a race because they do not share the same racial characteristics. Being spread across the world, you truly would not expect Ethiopian Jews to have anything in common with Ashkenazi (European) Jews, Jews from communities in Morocco, Iraq or India.