Translation:An Israeli and an American are sitting in a restaurant.
Well, if you form gentilic adjectives from nouns with the suffix ־ִי, it only receives the stress, if it belongs to the Jewish realm around 1900. So you have פַּרְסִ֫י Persian or רוּסִ֫י Russian, but on the other hand f.e. דֶּ֫נִי Danish or נְיוּ־י֫וֹרְקִי of New York. יִשְׂרְאֵלִי, already coined in post-biblical Hebrew naturally belongs to the first group, even if you do not shorten the qamats.