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Actors preparing for “1945,” a play produced by Al-Midan Theater after one inspired by the case of a convicted murderer generated protests. CreditUriel Sinai for The New York Times 
HAIFA, Israel — The play had been staged many times for Arabic-speaking audiences in Israel without controversy. But a performance with Hebrew subtitles for a wider audience was all it took to touch off a major furor.
The play, “Parallel Time,” explores the personal details of prison life for a Palestinian man convicted of killing an Israeli soldier. Though it is fictional, the story closely resembles a real case that has inspired strong emotions in Israeli society.
The family of the murdered Israeli soldier protested outside Al-Midan Theater in Haifa, which produced the show. The city of Haifa froze the theater’s financing and began an investigation into its activities. The Culture Ministry, which established the theater in 1994, opened its own inquiry. The Education Ministry retracted the play’s eligibility for subsidized performances for students.
“The citizens of Israel will not pay out of their pockets for plays that accept the murders of soldiers,” said Naftali Bennett, the education minister, who leads the hawkish Jewish Home party.
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The controversy, which has been raging since the second subtitled performance in mid-April, has thrown the survival of Al-Midan, Israel’s largest Arab theater, into doubt. And it has laid bare some of the contradictions and constraints of life as a minority for Palestinians in Israel.
Palestinian cultural leaders and artists have been more vocal in recent years in expressing a narrative of dispossession and inequality. Meanwhile, Israel has been drifting rightward and shrinking the cultural space open to Palestinian artists.
“They don’t want to hear any other opinion,” said Salwa Nakkara, the theater’s artistic director, “as if there is no occupation, as if there is peace and everything is wonderful, as if we are not an ethnic minority.”
The ruckus has not been limited to “Parallel Time.” Within a few days, a controversy erupted over a prominent Arab-Israeli actor’s refusal to perform with an Israeli theater troupe at a Jewish settlement in the occupied West Bank. In response, the culture minister, Miri Regev, threatened to withdraw government financing for a children’s theater that the actor, Norman Issa, heads.
“Parallel Time” was inspired by the case of Walid Dakka, who was convicted of involvement in the 1984 kidnapping and murder of an Israeli soldier, Moshe Tamam.
Mr. Dakka, 53, has served nearly 30 years of his 37-year sentence. He has maintained from the beginning that he is innocent, and he advocates pacifism along with Palestinian nationalism. He married a woman who visited him and other inmates in prison, and for 13 years he has been waging a legal battle for conjugal visits, hoping for a child.
The play does not dwell on why the character inspired by Mr. Dakka is in prison. Instead it uses simple lighting and props to tease out the insecurities of life behind bars. His budding romance with a female visitor is depicted through the woman’s reading of his poignant letters.
It also examines absurdities of prison life. One character serving a long sentence is obsessed with whether automobile tires have improved since he was locked up.
“Why do you want to know?” a new arrival asks.
“In case my future car gets a puncture!” the older prisoner replies.
The play was staged in Arab communities for two years, including in nine schools. Then Bashar Murkus, the director, translated it into Hebrew and staged a performance with Hebrew subtitles at Haifa University in May 2014. The performance itself was surprisingly successful, Mr. Murkus said, and Al-Midan decided to repeat it at its own theater as part of Palestinian Prisoners Week, held in Haifa in April.
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An audience in Beersheba. CreditUriel Sinai for The New York Times 
“We and the theater thought it was important to show it to a Jewish audience,” said Mr. Murkus, “to show them the lives of the prisoners.”
But then a reporter called the play to the attention of the Tamam family, who responded with outrage. “My heart wasn’t beating,” said Ortal Tamam, 26, the slain soldier’s niece. Mr. Dakka, she said, “tortured my uncle and kidnapped him and murdered him — and he is your hero?”
Mr. Tamam’s family maintains that he was tortured before he was killed, but Abeer Baker, one of Mr. Dakka’s lawyers, says there is no mention of any torture in the court documents.
Word of the play spread in Israel at a time when a new right-wing governing coalition was being formed, and when feelings were still running high over the war with Hamas in Gaza last summer.
Opponents of the play acknowledge that it does not glorify violence. The problem, they say, is its sympathetic focus on a character who is based on a convicted murderer.
Shay Blumental, a municipal councilor in Haifa, said the theater had made matters worse by presenting the play “in the framework of marking Palestinian Prisoners Day, which is another name for the Palestinian Terrorists Day.” Mr. Blumental was referring to Palestinian Prisoners Week.
“Every year I’ve raised my hand in support of the theater, because I think it is important that there be a theater for Arab culture,” Mr. Blumental said. “But — and this is a big but — if the theater decided to take a step that is political, there is a price.”
Ms. Nakkara, the artistic director, accused the Culture Ministry of wanting art “to be used in the service of their government.”
The theater’s latest play, “1945,” is about life in a Palestinian village as World War II ends and the 1948 Middle East conflict looms.
Unlike Al-Midan, many Arab artists and cultural institutions in Israel avoid taking government money. They do so in part to support broader calls for a boycott of the Israeli government and Israeli companies over violations of Palestinian rights, but also to avoid censorship of their work.
The Arab bloc in the Israeli Parliament, known as the Joint List, has tentatively issued its own call for a boycott. In a statement issued after the controversy over the play, the bloc asked foreign consulates to “reconsider your bilateral cultural cooperation” with Israel if the government did not stop what it called the harassment of critical artists and institutions.
Mr. Murkus, the director, said he was glad “Parallel Time” was attracting so much attention.
“I’m proud that the play could shake these people, and the state, and show their real selves,” he said. “It’s very important to remember, for those who have forgotten, where we are, and what state we are working in — we are in a state of occupation, and not a state of democracy.”