I found this article alleging that Israeli archaeologists have religious and political motives for their work to be, well, a non-story. Honestly, I can't comment on the allegations that the Israeli archaeological "machine" deliberately strengthens evidence for Jewish cultural achievements in the region and deliberately undermines evidence for the depth of Arab occupation. I don't personally know enough about Israeli archaeology, and all the Israeli archaeologists I know work in the Paleolithic and Neolithic periods, where Jewish statehood is less of an issue. That said, I thought Nadia Abu el-Haj's book Facts on the Ground , and the controversy that surrounded her tenure case, were fascinating examples of the politics of the past.
Whatever may be the case in Israel, we would all be in denial if we pretended that representation of or research on the past is without political implications. Just look at the on-going controversy over the history curriculum in Texas. Saddam Hussein used to dress up as Hamurabi. Hitler pressured the German archaeologists to "prove" the Germanic prehistory of Greece to legitimize his territorial ambitions. Archaeologists in the USSR were asked to legitimize Russian rule of eastern Europe by perpetuating the myth of Slavic unity in prehistory. White Rhodesians were unwilling to admit that black Africans had built Great Zimbabwe, denying both the history of African people and their achievements, to justify colonial rule.
Politicizing the past is not necessarily a negative phenomenon. Today, Great Zimbabwe stands as a symbol for all Zimbabweans of their great history. Heck, the country was even named for the archaeology! Countries around the world take pride in their prehistory and history, lovingly preserving sites, architecture, and artifacts.
The political element is inevitable (although obviously more likely in highly charged contexts, like Middle Eastern history, or the Kennewick Man controversy, or post-colonial Zimbabwe). I'm not saying we should embrace the political, but it seems more sensible to acknowledge it than to claim an unobtainable neutrality.