New Covenant Israel is made up of those who have placed their faith in Jesus Christ as their Redeemer, regardless of their genetic background. The true “Israel of God” is therefore made up of both Jews and Gentiles united in “one new man” (Ephesians 2:15). This was also taught by Jesus Himself in John 10:14-16:
I am the good shepherd. I know my own and my own know me, just as the Father knows me and I know the Father; and I lay down my life for the sheep. And I have other sheep that are not of this fold. I must bring them also, and they will listen to my voice. So there will be one flock, one shepherd.
Jesus is clear that “sheep” outside of Israel will be brought into God’s flock, and Jesus Himself is the shepherd of this one new flock. Paul discusses this controversial issue at great length in the book of Galatians, doing his best to clarify that physical circumcision is no longer important in the New Covenant where the boundaries of God’s restored covenant people are no longer dictated by the Law of Moses, but by faith in Jesus. Paul ends his letter by referring to all those who believe in Jesus as “the Israel of God.”
This definition of the “Israel of God” is disputed by dispensationalists who teach that “Israel” always means the genetic descendants of Abraham, and therefore the “Israel of God” must mean genetic descendants of Abraham who also believe in Jesus. Yet as far back as John the Baptist, who warned the Pharisees that God could raise up stones as children of Abraham (Matt. 3:9 ), this narrow view of “Israel” was rejected for the coming Kingdom Age.
Here is how Bible scholar Alistair Donaldson deals with this particular issue in his short and concise book, The Last Days of Dispensationalism, pages 17-19:
…in the Ryrie Study Bible notes for Galatians 6:16, [Charles] Ryrie explains the meaning of the phrase “the Israel of God” in this way:
the Israel of God. I.e., the Christian Jews, those who are both the physical and spiritual seed of Abraham.
Ryrie has in this explanation given the word Israel a meaning that betrays the demands of his literal principle of interpretation. He has in fact redefined the meaning of the word Israel by restricting its referents to only those who are both bloodline descendants of Abraham and are Christians. Non-Christian Israelites and Israelites not physically of Abrahamic descent are excluded. This is not the normal or plain everyday use of the word Israel. Not only has he violated his own interpretive principle and his claim to the consistent application of it, he also appears not to have considered how the immediate literary context clarifies for readers how Paul is using the term “the Israel of God” in this instance —a meaning quite different to what Ryrie suggests. When the context provides meaning in this way we are not at liberty to supply a different meaning. Context reveals that believing Jews have already been included in the words “all who follow this rule.” To follow Ryrie’s interpretation would have us read the verse [Gal. 6:16] as follows:
“Peace and mercy be upon Christian Jews and Christian Gentiles —that is, all who walk by this rule— and upon the Christian Jews.”
This makes no sense and in fact makes the phrase under discussion completely redundant. The sad irony here is that the passage containing this phrase is concerned to show that neither circumcision nor uncircumcision (i.e. being Israelite are non-Israelite) is of any relevance. For Ryrie to impose such a distinction is counter to the purpose of the text in that it sets up a distinction whereas the text seeks to remove such a distinction.
It seems that Ryrie’s interpretation is concerned to maintain his commitment to the dispensational distinction between Israel and the church and yet to do so he has had to sacrifice his commitment to the basis of his belief system, that is, a consistently applied literal hermeneutic. It appears out of the question for Ryrie to consider the possibility that “Israel” in this context could be a reference to all believers—a legitimate understanding whereby the phrase functions as a clarifying descriptor of the “all who walk by this rule”. If Ryrie was to be faithful to the literal, normal, and everyday usage principle, he in fact should understand the word Israel as a reference to Israel the nation, but this would have the meaning of pronouncing blessing on Christian Israelites, Christian Gentiles, and upon “the Israelites”—yet “the Israelites” would include the Christian Israelites already mentioned. Again the phrase “the Israel of God” becomes unnecessary. Further, it would see Paul pronouncing blessing on the very people he has, in the context of the entire letter to the Galatians, excluded from blessing—that is, those who regarded circumcision as an identity marker of the people of God. In effect Paul would be extending a blessing to as many as walk by this rule (of circumcision not counting for anything) and as many as don’t follow this rule (circumcision counts for something)—and would therefore be both nonsense and contrary to his entire line of reasoning. The “normal usage” meaning is just not possible in this use of the word Israel. Its intended meaning or referent must be found by other considerations.
Jesus is the Messiah of Israel, the Lion of the Tribe of Judah, the Davidic King, who today rules over the heavenly Jerusalem. You can’t be “in Him” and yet be “out” of Israel. Is this view properly called “replacement theology”? Not a chance! It’s not about Gentiles or “the Church” replacing Israel, rather it is all about Gentiles coming in and adding to Israel, expanding its borders so that God’s salvation may encompass all the nations of the world!