(Corrects name of lawyer in para 16)
* Arab citizens decry ruling as racist and intrusive
* Justice fears national "suicide", demographic change
By Dan Williams
JERUSALEM, Jan 12 (Reuters) - Israel's top court has upheld a law denying citizenship to Palestinians married to Israelis, with one judge saying it helped the Jewish state fend off "national suicide".
By a 6-to-5 vote, the Supreme Court late on Wednesday rejected petitions against the 2003 ban, which civil liberty groups denounced as racist for potentially forcing members of Israel's 20-percent Arab minority who wed Palestinians to emigrate.
The former centrist government championed the law chiefly on security grounds given Palestinian gun and bomb attacks.
But Interior Minister Eli Yishai, who congratulated the Supreme Court on Thursday, made clear that shoring up Israel's Jewish majority was also a concern. Yishai's party, run by rabbis, is a powerful partner in Prime Minister Benjamin Netanyahu's rightist coalition.
The ruling, Yishai told Israel Radio, served to stem "a situation in which, not too many years hence, we would find ourself losing the majority, (and) faced with terrorism".
Israeli law guarantees full civil rights, including political representation, to Arab citizens, who are mostly Muslim. But they often complain of entrenched racism.
Many Israeli Jews have been outraged by pro-Palestinian displays among their Arab compatriots, especially given the rise of hostile Hamas Islamists in Gaza and stalled peace talks with the secular Palestinian leadership in the occupied West Bank.
Justice Asher Grunis, whose nomination as the Supreme Court's next president was welcomed by conservatives, voted to keep the citizenship law, saying in the ruling that rescinding it "would mean thousands of Palestinians entering the country after marrying Israeli citizens".
"Human rights do not prescribe national suicide," he wrote.
Grunis framed his remarks around fears of infiltration by Palestinian militants, saying: "The (law's) blow, as presented, to family life must be viewed against the certain harm, given past experience, to the lives and bodies of Israelis."
Dissenting, Supreme Court President Dorit Beinisch and four other justices described the freedom to marry as being at the heart of democratic principle.
The Association for Civil Rights in Israel, one of four petitioning groups, accused the Supreme Court of perpetuating a "racist law" and "failing to uphold basic human rights in the face of the tyranny of the Knesset (parliament)".
The judicial review was also watched closely after right-wing politicians pursued procedural changes that would have helped them to influence selection of Supreme Court judges.
On the attorney-general's advice and citing the need to preserve the court's independence, Netanyahu blocked that legislation.
Normally Israel naturalises the spouses of its citizens, though it sometimes offers as a stop-gap permanent residency, a similar status but without the right to vote. Many Palestinians see economic opportunity in being an Israeli citizen or resident, as well as access to health and other state benefits.
Sawsan Zaher, a lawyer for the Israeli Arab lobby Adalah, another petitioner, said the ruling showed "the country is interfering in the choosing of spouses".
Seeking to play down the law's disruptive effect, Yishai said his ministry issued an average of 1,000 special entry permits a year to Palestinians and other non-Israelis on the basis of what he called "family unification". (Writing by Dan Williams; Editing by Sophie Hares)