Lilmod,
1. Who says that they are not allowed to have a draft? On the contrary, it is a Torah obligation to join the IDF Rambam Hilchot Melachim (5:1-2 and 7:4).
2. The fact of the matter is that while there is room for improvement most aspects of the government ARE run according to Halacha. All public institutions are certified kosher. The IDF does not allow any chametz on bases during Pesach (tough on Druze, Bedouin and Circassian soldiers). All state-owned chametz is sold to a goy. All but essential government offices are closed on Jewish holidays including Chol HaMoed. Halacha has a quasi-constitutional (instead of a constitution Israel has a series of “basic laws”. I could go on and on but there are space limitations.
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