Oh, yes. Do it. What campaign setting would use Arabic Dwarves?
Perhaps that alternate earth setting from... some kids author whose name I can't remember, where it turns out that the Fair Folk in the Hollow Hills - the 'Fair Nixies' - are actually 'Phoenicians'... but Phoenician Dwarves (with Dwarf Camels).
Or, maybe, all that living underground makes them really susceptable to sunlight?
Did you spot I can't spell 'susceptable'?