God chose ancient Israel out of all the nations of the earth and determined that they would be a holy nation. He ordained that they would be a people set apart from the rest of the world. The Old Covenant was intended not only to be a schoolmaster to teach Israel how to live in such a way that they would recognize the Messiah when He came (Galatians 3:24), but it was also intended to set Israel apart—to make them holy. In so doing, He intended the entire nation to be a witness of Him. This passage demonstrates this.
God proposed the Old Covenant to Israel on the day of Pentecost. Israel accepted the terms of the agreement and thereby signed up to be a light to the rest of the world. God had given them the most superior set of laws that mankind had ever encountered, which would leave the rest of the world in awe due to the beneficial effects that would come from it.
We know from the New Testament that the only problem with this covenant was the heart of the people entering into it (Hebrews 3:10-12; 8:7-8). The God-given terms of the agreement were absolutely perfect for what He wanted to accomplish. One of His main purposes was for Israel to be an example, a witness, to the rest of the world of the right way to live. Incidentally, the Tabernacle that Israel carried with them in the wilderness was even called "the Tabernacle of witness" (Numbers 17:7; Acts 7:44).
If Israel had been faithful to the covenant, they would have received blessings beyond belief. In the blessings portion of Deuteronomy 28, God was prepared to set Israel high above all the nations of the earth. Their cities and farms would be prosperous; their children would be healthy and strong; their herds and flocks would be numerous; they would have an abundance of food; and they would have protection from their enemies. They would have rain in due season, and everything they put their hands to would be blessed. They would have enough that they could lend to other nations and not borrow. God intended them to be a holy people whose behavior and prosperity would make it obvious to the rest of the world that God had set them apart. The effect would be so dramatic that Israel would be feared!
However, as we know, Israel failed. The accounts of the Old Testament prophets show the great lengths to which God went for Israel in cleaning her up and taking her under His wing. Yet, once she caught a glimpse of her God-given beauty and wealth, all she did was play the harlot with the surrounding nations, rather than being a witness to them (see Ezekiel 16).
Today, the United States is the richest nation on earth, which seems to coincide with God's promise of blessing until we realize that America is also the greatest debtor nation. Parts of the nation suffer drought, and other parts are practically floating away. Much of our food is either imported or grown from genetically mutated seed. Our cities are filthy, crowded, and corrupt, and our family farms are dying through environmental regulation and corporate buyouts. We live in abundance yet cannot afford our lifestyles, plunging further into personal debt. The nation's churches are pathetically weak, barely standing to fight the onslaught of secular culture—and, in fact, accepting much of it in a misguided spirit of tolerance. In short, America is the farthest thing from being a kingdom of priests or a holy nation. Our entertainment industry shows, like nothing else, what sort of "witness" we are making to the world.
Israel failed because her heart was not right. Biblically, the word "heart" is synonymous with "mind" and "spirit." We know that God desires that all Israel be saved (Romans 11:26; II Peter 3:9) and that in the future He will replace Israel's heart of stone by pouring out His Spirit (Ezekiel 36:26-27). However, for a few—known as the remnant, the church, the Body of Christ, spiritual Israel, the Israel of God, or the firstfruits—God decided to do this ahead of time.
He gave His Spirit on the Feast of the Firstfruits, the day of Pentecost, AD 31, so that a remnant of Israel would have a heart of flesh and not of stone. God gave His Spirit so that spiritual Israel could obey God both in the letter and in the intent of His law. In addition, just as He gave Israel His law so she would be a witness, God gave the church His Spirit so that Christ's disciples would be witnesses. By receiving a portion of the Spirit that proceeds from the divine Lawgiver, the firstfruits are able to understand the intent behind God's laws. More than this, by yielding to the promptings and motivations of God's Spirit, they can begin to take on His character and actively do good rather than merely avoid sin.
