A major part of any culture is its victims in terms of jokes. Logically, the more multi-ethnic a culture, the more multi-ethnic is its humor. In any case, a given trait is attributed to a given group, forming the base of countless jokes. Depending on the political and cultural background, people tell these jokes more or less openly.
The major target of French humor is the Belgium people. They are reputed to be simple-minded people. An example of this stereotyping is the following joke: God gave the Belgian people a choice between having oil (as in crude oil) and French fries. The Belgians chose the French fries.
The United States, as an immigrant country, makes funny of everybody. A nice example of the free-wheeling world of ethnic abuse is the following joke: There were Tarzan, Jane, and the chimp Cheetah. If Tarzan and Jane were Jewish, Cheetah would be a new fur coat; if they were Italian, it would be the other woman; if they were Polish, it would be the bright child. On a similar note, the reason the Irish was on the roof of the bar because he was told that the drinks were on the house. No group is safe from stereo types and humor, especially from comedians of the same ethnic group. In terms of public comments, political correctness does apply. However, in terms of entertainment, ethnic humor is par for the social course.
Israel is no different. Every ethnic group has its label: Persians are cheap; Moroccans are primitive; Germans are overly formal, to name just a few. Most Israeli humor is based on these stereotypes. Like in the United States, making fun of a group of people seems to function as a release of social tension, a lesser of two evils as compared to open violence between ethnic groups.
I assume that all societies have some ethnic group to mock. In the grand scheme of things, it is better to laugh than kill.