(Updates after punishment announced, end of match)
By Ori Lewis
JERUSALEM Jan 29 (Reuters) - Hundreds of police officers and stewards watched as Beitar Jerusalem crushed Arab club Maccabi Umm el-Fahm 5-0 in their Israeli State Cup tie on Tuesday after receiving a relatively mild punishment for racist behaviour from some of their fans at the weekend.
A racist group among Beitar fans caused uproar in the Jewish state on Saturday when they held up banners during a Premier League match to protest at owner Arkady Gaydamak's planned recruitment of two Chechen Muslim players.
Tuesday's match concluded with little incident and there was no racist chanting by Beitar's anti-Arab element. Police barred 50 Beitar supporters from attending and one fan from each team was arrested.
Beitar faced a disciplinary hearing earlier in the day and were ordered to close the Teddy Kollek Stadium's 7,000-seat eastern grandstand, where hard core supporters sit, for five matches. They also received a fine of 50,000 shekels ($13,400).
On Monday, the club volunteered to play the match against second-division Umm el-Fahm behind closed doors but had a change of heart on Tuesday. Their opponents threatened not to show up if a spectator ban was imposed.
One banner on Saturday read "Beitar will always remain pure". Other signs criticised Gaydamak's plan to sign Zaur Sadayev and Dzhabrail Kadiyev of Russian premier league side Terek Grozny.
The Israel Football Association (IFA) court said the punishment was relatively mild because Beitar had begun to make an effort to stamp out racist behaviour among its fans.
IFA chairman Avi Luzon also said the message was beginning to sink in.
"I'm pleased that Beitar Jerusalem and the police acted decisively and the crowd understood that there is no room for compromise and there will be zero tolerance (for racism) from now on," Luzon said after the match.
Israeli President Shimon Peres said: "The Jewish people have been fatally affected by racism more than any other people in the world - I am certain that our whole nation is shocked by this phenomenon and will never accept it."
Beitar are a bastion of Israel's political right wing and the only leading team in the country never to have signed an Arab player because of fan pressure.
They have the worst disciplinary record in Israel's Premier League. Since 2005, Beitar have faced more than 20 hearings and have received various punishments, including points deductions, fines and matches behind closed doors.
Arab citizens make up some 20 percent of Israel's population of almost eight million. Arab players feature prominently at all other clubs and have long been included in Israel's national team. (Editing by Ori Lewis)