The modern State of Israel, founded in 1948 by the British, is not the Israel of the Bible.
The Israel of the Old and New Testament refers to the ancient figure Jacob, son of Isaac and grandson of Abraham, whom God renamed "Israel" (יִשְׂרָאֵל) after Jacob wrestled with an angel. The Hebrew word "יִשְׂרָאֵל" literally translates to "he who wrestles with God".
Jacob's descendents are thus called "the 12 tribes of Israel". While it's true that these tribes are the early Jews who form the foundation of the Jewish religious and cultural identity, it is more theologically consistent to interpret the word "Israel" in Scripture as a metaphorical descriptor of God's people in general. This becomes more obvious when considering that throughout the New and especially the Old Testament, Jewish mythology as well as various allegories, analogies and metaphors are the most common way of imparting divine wisdom unto the reader. Very few aspects of Scripture are to be read at face-value or taken absolutely literally. Many of the metaphorical descriptors used in Scripture read as quite archaic, simplistic, outdated or even violent to a modern person.
To someone who reads the Bible in its entirety from a culturally and historically informed perspective, "Israel" - semantically and in theological context - does not elevate a specific race, tribe, ethnicity or nationality over other human beings.
Citizens of the modern State of Israel are not "God's chosen people" any more than other believers are. Galatians 3:28 tells us that "there is neither Jew nor Gentile". And as Romans 2:11 states, "God does not show favouritism".
(All of this to say, most inhabitants of the modern State of Israel are not even directly related to the twelve tribes of Israel mentioned in the Bible.)
It is not a stretch to say that the word "Israel" simply refers to "those who wrestle with God".
