Israel and the Law
In the beginning creation reflected the goodness of God, which made knowing him easy. However since the fall creation no longer accurately reflects the goodness of God in unity. This makes knowing him in any specific way, from creation, impossible. Because of this God chose Israel to possess his law, so that by keeping it the world would once again be able to know him in unity.

Exodus 19:3-6 explicitly states that Israel was chosen as God’s treasured possession from all the nations of Earth.

…while Moses went up to God. The LORD called to him out of the mountain, saying, “Thus you shall say to the house of Jacob, and tell the people of Israel: You yourselves have seen what I did to the Egyptians, and how I bore you on eagles’ wings and brought you to myself. Now therefore, if you will indeed obey my voice and keep my covenant, you shall be my treasured possession among all peoples, for all the earth is mine; and you shall be to me a kingdom of priests and a holy nation. These are the words that you shall speak to the people of Israel.”
(Exodus 19:3-6 ESV)

The exclusivity (holiness) of Israel shows that unity with God cannot be an unconditional acceptance of all people from all nations of the earth without discrimination. The unity that God seeks to re-establish with mankind is unity in his own image, the same type of unity that existed before the fall. God chooses Israel because he will not compromise himself to accommodate all nations and their “cultures” for the sake of a different type of unity (which isn’t unity at all). Therefore because God is exclusive (holy) in unity Israel must also be exclusive (holy).

And the LORD spoke to Moses, saying, “Speak to all the congregation of the people of Israel and say to them, You shall be holy, for I the LORD your God am holy. Every one of you shall revere his mother and his father, and you shall keep my Sabbaths: I am the LORD your God. Do not turn to idols or make for yourselves any gods of cast metal: I am the LORD your God.
(Leviticus 19:1-4 ESV)

God is the definition of holiness (i.e. the specific way he is different from the world), to command the same holiness from Israel is to command unity from Israel. To achieve the holiness of God apart from unity with him is to rival God (impossible to actually achieve). Therefore this means that the law is a command to unity in God.

Israel and the Nations
God established Israel as a people for himself, on his own terms (customs, law, location, etc), so that the world might know him in unity. So that through their obedience to the law (God) Israel would show the exclusiveness of God, in relationship (unity), to the world.

God always intended to bless the nations of the earth by exclusively choosing Israel to be his people. In Genesis 22:15-19 God tells Abraham that it is because of his obedience that all the nations of the earth will be blessed through his offspring. This is echoed in Isaiah 49:6, where God explicitly states that he chose Israel to be a light to the nations to declare his holiness to them so that many would be saved.

And now the LORD says,
he who formed me from the womb to be his servant,
to bring Jacob back to him;
and that Israel might be gathered to him—
for I am honoured in the eyes of the LORD,
and my God has become my strength—
he says:
“It is too light a thing that you should be my servant
to raise up the tribes of Jacob
and to bring back the preserved of Israel;
I will make you as a light for the nations,
that my salvation may reach to the end of the earth.”

(Isaiah 49:1-7 ESV)

At the revelation of his holiness (exclusiveness in unity), reflected through Israel, the sinfulness of the nations would become evident. Showing the world that he can be known and does not allow all things and all things are not a part of him.

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