European Jews make up the Israeli elite. There were Jews already living in the land that is now Israel, who were very much not part of any colonization movement, but we're well integrated into the local economy. When the Europeans cames, there was a lot of aminus between them and the native Jews as well as the native Muslims.

As the conflict developed and identities hardened, the native Jews became increasingly accepted within the Zionist camp, and less so within the Arab camps. Relatedly, this led to a bunch of Arab countries doing their own ethnic cleansing of Jews, who would then go to Israel. Again, these Jews were overwhelming native to where they were expelled from, not European.

A massive amount of the original conflict started not as a racial dispute, but as a property dispute. Britain brought over its own notion of land ownership that did much match the local notion. The immigrant Jews bought land under the British system, which led to a bunch of dueling claims, both sides of which were legally valid.

The amazing thing about reading the history on this, is that everyone knew this was going to happen. There were contemporary Zionists who warned about it. Contemporary Arabs warned about it. Even the fucking Nazis warned about it (which is why they were much more interested in forming a Jewish colony in Madagascar).

At this point, I'm not convinced any of this history actually matters. We have Israellis and Palestinians now. Both of which are modern identities that were created as part of this conflict. And those are the identity groups that need to reconcile in order to solve it. The original land disputes are so far in the past that there is no way to unwind them. The new land disputes can still be unwound, but those are illegal under every system, including Israeli law (although, I'm not so sure about now, as they recently passed laws authorizing it, so the very new ones might be legal under Israeli law).