GAW and Akuperma: That’s a second issue. The country has a right to make these demands. What they should do when the Chareidim refuse is a separate issue. Hopefully some middle ground will be reached. How to deal with conscientious objectors is an issue the state will have to deal with after. But they do have a right to make this law.
And Akuperma: If they want to be conscientious objectors to the state existing, a perfectly logical and fair response would be to put them in their own area (let’s say Meah Shearim), cut off all economic support, and allow them to run their own country. Something tells me that wouldn’t go over very well. So they can call themselves conscientious objectors, but as long as they take money and use the infrastructure, Israel can demand that they be part of the country.