Why did God choose and prepare Israel as a covenant nation?
God chose and prepared Israel as a covenant nation to be His peculiar treasure above all people, sovereignly designating them for a unique role in His program for the human race, so that through this favored nation all other nations could be brought to the knowledge of Israel's God.
In the Exodus 19 setting, Israel had just come out of Egypt under Moses and was gathered around Mount Sinai before receiving the Law and the Ten Commandments. God told Moses what to tell the children of Israel. He said that if they would obey His voice indeed and keep His covenant, they would be a peculiar treasure unto Him above all people. Les explains that God always leaves it up to their will; it was conditional, not forced. God was setting Israel aside and above all other nations, which is why they are called the chosen people, the favored nation, or the covenant people. He sovereignly designated this little nation for a unique role in His overall program for the whole human race. That did not mean the Gentile was blanked out. The scope was that God could prepare this favored, covenant nation for the express purpose of bringing all the other nations of the world to a knowledge of Israel's God.