The Arabs of mandatory and then Jordan and Egypt occupied Palestine were offered statehood next to a Jewish state in 1937, 1939, 1945, 1947, 1967. Then, they were occupied by Israel after losing another self-declared war of extermination, they rejected Jewish equality in sovereignty in 1979, 1996, 2000-01 (Clinton Parameters), 2008, 2014, 2020 and now.
As British foreign secretary Ernest Bevin said in 1947 when he handed the "irreconcilable conflict" to the UN:
"For the Jews the essential point of principle is the creation of a sovereign Jewish State. For the Arabs, the essential point of principle is to resist to the last
the establishment of Jewish sovereignty in any part of Palestine.”
The Arabs of Gaza and the West Bank don't want a state if statehood means the Jews will also have a sovereign state. They've been saying clearly for a century that Islam mandates that they never accept Jewish sovereignty. Listen to what they say every day on https://palwatch.org and https://memritv.org. instead of giving them the respect of actually listening to what they've said.
If Israel isn't a democracy, then none of the countries I listed is either. Most European states, especially in eastern Europe, are ethnostates. I live in two: Latvia and Portugal. I passed the Latvian state language exam to get permanent residence and could easily do the same in Portugal if I wished to.
Why do you single out Israel for exclusion from the sovereignty and democracy club? The answer is in the IHRA's definition of anti-semitism: you demand of Israel behavior you demand of no other democratic ethnostate. It's just an update of the signs in front of restricted hotels until the 1960s: no Jews and dogs allowed.