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There are two questions, but the second "What effect did it have..." is relatively simple. If Israel was not created, there would be no Israeli-Palestinian Conflict. It would be a Jewish-Arab Civil War.

Why Israel was created is a more interesting question:

There are two operative parts to that question. There is the implicit question as to whether a Jewish State is something that should exist. There is the explicit question as to whether the geographical location chosen for this Jewish State is proper for its mission.

1) Why a Jewish State: Herzl explained quite well that the European concept of a nation-state was dependent on the idea that all of the people in any particular nation were of the same ethnic stock and heritage. Jews were branded by this system to be "the Other" and were regarded at best as possible equals and at worse as traitors, spies, thieves, and fifth columns. When the Dreyfus Affair turned out marches in Paris that said "Death to the Jews" on account of a kangaroo court against a particular guiltless Jew, it became clear that the Jew could not be integrated into Europe. After the Holocaust, the strongest proof that the Jew and the European Nation-State were irreconcilable, this view persists. In Europe, it is now directed at the Muslims since the Jews are not large enough of a threat to the European System. Unlike Muslims, though, which can return to their countries of origin if the discrimination becomes intolerable, the Jews did not have such a place. This is why the Jewish State is necessary. Since it came into existence it has accepted Jewish political refugees from over 50 nations and flown missions at its own expense to rescue Jews from at least 10 nations.

2) Why Palestine: Ahad Ha'am explains that the Jewish Soul is intrinsically connected to his history and in the same way that a German-American can never be as properly German as a German in Germany, the People of Israel can never be as properly Jewish if they are not in the Land of Israel. The relics in that land speak to a Jewish sensibility and character. There are also religious reasons as expounded by Rav Avraham Kook which posit that the development of a Jewish State in Israel hastens the arrival of the Messiah. There are additional political reasons why Palestine and not Europe. As explained above, the European Culture is strongly anti-Other and making a Jewish State there would have fostered much more contempt and alienation (ironically).

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