They were chosen to demonstrate certain things to the world, much as a teacher picks a student to demonstrate a math problem on the chalkboard in front of the class.
When they rejected Messiah they were cut off of the olive tree temporarily, and the Gentiles were grafted in. At some point the Jews will recognize Jesus and will be grafted back in.
The Jews' possession of their land was dependent on their faith. They refused to have faith, so they lost their land. They do not have an unmitigated right to it. We are to treat Israel like any other nation, which means "love your neighbor as yourself", as Ron Paul has repeatedly said.
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