"Arabs" is too broad a term to be useful in this context. Even "Arabs of Palestinian ancestry" would have to be defined to make it work practically. As for the moment, it is because Israel is at war with Arab "Palestine" and I don't recommend having an immigration policy of accepting as citizens enemies of the State who wish for and are working towards the State's destruction. In future, when there is real peace, it would depend on how many states are involved. I think nations have every right to prefer citizens of their ethnic culture and ancestry. Same as Ireland, Greece, Italy, etc.