I'm really glad you asked this question, because everyone, even people who get that anime characters are usually Japanese, keeps insisting that FMA is a prime example of Caucasian anime characters. (The first series made this hard to refute, with Edward's real-world self living in 1930's Germany.) Even the Racebending comm was using it to show that characters aren't necessarily the race of their creators, or the majority race of the country they were created in. Yet, I was torn on it. Final Fantasy, with its advanced CGI, has shown us conclusively that the Japanese have no problem putting blond, blue-eyed Japanese people in Western fantasy settings. (Is this so different from how we keep populating non-European fantasy worlds with white people? Probably not nearly as harmful, but done with the same sort of blind ethnocentrism?)

I honestly can't figure out what they're supposed to be. Louis Armstrong looks white to me. Mustang and Hawkeye look Japanese. The idea of a WWII fusion of Germany and Japan into this fantasy world is fascinating. I wonder if it was intentional, or even if Arakawa was just winging the character designs.