I understand that "Killing an Arab" is Robert's homage to Albert Camus's "The Stranger" (1942): ...I'm alive, I'm dead. I'm the stranger, killing an Arab....
However when the single was released in the UK in 1978/79 and later as apart of the US version of their debut album in 1980 it was a tumultuous time for the Arab world:
So some backlash is to be expected, was there any?
While you wait for answers, it should be noted that the vast majority of Iranians are not Arabs, and Iran is thus not a part of the Arab world.