Romans 11 represents the culmination of Paul’s argument in chapters 9-11, so it’s important to understand what he’s really saying. The key verse may be v. 26: “and so all Israel will be saved.” What does Paul mean by ‘all Israel’?
There are three major options: first, Paul could mean national Israel; second, Paul could mean spiritual Israel; or third, Paul could mean elect Jews from within national Israel. I believe the second option is the best choice for the following reasons:
1) A key point for Paul in this whole section is that “not all who are descended from Israel are Israel” (9:6).
2) Chapter 10 is all about how salvation is available to anyone who believes – in other words, spiritual Israel.
3) The point of the olive tree illustration in chapter 11 is that there is one tree, with branches grafted in from among the Gentiles and then also from among the Jews. What does this olive tree best represent? Spiritual Israel.
Chapter 11 does also suggest that there will be a time when Jews, out of envy for their Gentile counterparts, are grafted back into the olive tree from which they were cut. Yet the overall point is not that God will re-establish national Israel: the point is that God will fulfill his promise to spiritual Israel, which are the individuals comprising the remnant of Jews and Gentiles saved by the righteousness of faith offered through the mercy of God.
Note where Paul is then going with this in chapter 12: “Therefore, I urge you, brothers, in view of God’s mercy, to offer your bodies as living sacrifices.” We are to live our lives with the gratitude that flows from God’s mercy extended to us. We are part of the Israel that God has and will save – and as Paul notes as he concludes chapter 11, this is glorious indeed.