A clash between Arab protesters and police, and a paratrooper's crash-landing during a ceremonial jump marred Israel's 60th independence day festivities Thursday. The paratrooper and two bystanders were seriously hurt when he missed his target on a Tel Aviv beach and slammed into a crowd of spectators. Several others were slightly hurt. Later, 11 police and protesters were injured during a march by Israeli Arabs marking the flip side of independence day for Arabs - the "nakba," or "catastrophe," when hundreds of thousands of Palestinians were uprooted in the 1948 war over Israel's creation.

The march highlighted the tensions between Israel's Jewish majority and Arab minority.

Across the country, Israelis held barbecues in backyards and public parks, and were entertained by a naval parade and a Bible quiz.

Six decades after rising from the ashes of the Holocaust, the Jewish state is still plagued by threats from abroad and an identity crisis at home. Its 41-year occupation of Palestinian territories has invited international condemnation. Yet it also is a thriving democracy that has provided a haven for the world's Jews.

Independence day is a "celebration of the possible," said author Yossi Klein Halevi. "It means taking the dream out of the realm of the ideal and into the realm of the concrete, and that in turn means living with a certain amount of disappointment."

This year's celebration also was marred by a new criminal investigation of Prime Minister Ehud Olmert, whose legal woes are calling his political survival into question just as he is moving to forge a peace deal with the moderate Palestinian leadership in the West Bank.

According to police suspicions, Olmert accepted hundreds of thousands of dollars in illegal contributions from a U.S. citizen, Moshe Talansky.

Olmert said Thursday that he never took illegal contributions, but added that he will resign if indicted. He spoke after a gag order was lifted from the case.

Peace talks have produced no tangible results. Palestinian Prime Minister Salam Fayyad warned that "the peace process is facing difficulties, when compared with its declared goals." President Bush (web|news|bio) wants to see a peace deal by the end of the year, but the target date appears increasingly unrealistic.

Underlining those difficulties, thousands of Israelis flocked to Migron, an illegal West Bank settlement outpost, to celebrate independence day with music and barbecues.

Settlers have set up dozens of outposts in the West Bank in the past decade with the declared aim of preventing the establishment of a Palestinian state. Under the U.S.-backed "road map" peace plan, Israel promised to dismantle most of the outposts, but has not done so. Instead, Israeli Defense Minister Ehud Barak is engaged in protracted negotiations with settler leaders.

The clash in northern Israel took place after thousands were leaving the march. Police said protesters hurled rocks at them and at cars on a nearby highway.

AP Television News showed police firing tear gas at protesters chanting, "Palestine, Palestine" on the side of a highway. On the other side, a small group of Israeli Jews gathered waving blue-and-white Israeli flags. Protesters say they were provoked by right-wing Israelis yelling "Death to the Arabs."

Five people were arrested, while five policemen and six protesters were injured, including an Arab member of Israel's parliament, the northern district's police chief and his deputy. After the tear gas rounds, one man emerged with blood running down his face and another was lying down in the grass.

Israeli Arabs - the descendants of Palestinians who remained on their land after Israel was created - now form a fifth of Israel's population of 7.28 million. They mostly define themselves as Palestinians who live in Israel and remain a distinct and largely disadvantaged minority.

Israeli Arabs have one of the highest birthrates in the Mideast region, prompting fears among Jews that one day, the Arabs will outnumber them in Israel.

In the West Bank and Gaza, Palestinians also staged events for the "nakba."

In Bethlehem, villagers marched with a huge key to symbolize the hope of refugees to return to their now-leveled villages in what is now Israel. In Nablus, people flew kites emblazoned with "Return." The 1948 refugees and their descendants number around 4.5 million and are scattered across the region.

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Associated Press writer Beth Marlowe contributed to this story.