I had an elderly arab at a bus stop ask for charity- i was torn- am i meant to give? i read in response to another charity question that there is a concept of not passing by someone who stretches his hand out for money...how does this work with regard to arabs in our Land and non- Jews in general? Can i give when I know that there are thousands of poor Jews who need that money too?
The Talmud [Gitin 61a] states that we should feed the poor non-Jew among the Jewish poor for the sake of peace with our non-Jewish neighbors and the Rema [YD 251:1] wrote it as practical Halacha. The Arush Hashulchan [ibid 13] adds that even when he comes on his own to beg for food we give Tzedaka to the non-Jew. Since you do not need to feed all the non-Jewish beggars with your limited financial resources it is enough to only give a small amount to the Arab in you r question and keep the rest for your fellow Jews in need.