I came across an article on US Biblical illiteracy (see http://www.weeklystandard.com/Utilities/printer_preview.asp?idArticle=5606&R=C6ED872E), which also has an interesting discussion of the US (and also England) tradition of believing themselves to be the Chosen People. There is currently an argument in the US about the extent to which the founders of the Republic in the eighteenth-century were actually motivated by Christianity, as opposed to vague deism, (see e.g. http://www.theocracywatch.org/separation_church_state2.htm), but the idea of the Chosen People certainly has been influential in many periods of history. My question is: is this a good thing? On the positive side, this sense of specialness preserved the Jewish people during the Diaspora in an amazing way. I also don't object in principle to the vision of America as a 'city upon a hill' (as pronounced by John Winthrop and later Ronald Reagan), in the sense of the US being a positive example to the world. (There is a problem if people comes to think that the US way is the only way, but that's a different matter).
But there is a big problem in how the concept of being the Chosen People affects relations with other tribes/nations/states. The Franks in the early Middle Ages believed they were the Chosen People and conquered large parts of northern Europe in wars, that were at least partly religious. I have a British book from the 1930s which discusses the British Empire and claims 'God permitted her [Britain] to conquer many heathen countries to facilitate the preaching of the gospel.' The Old Testament attitude to the nations around the Chosen People varies between two main commands of God: Israel must be kept isolated from foreign nations, lest they contaminate her or the foreign nations must be conquered (and sometimes genocidally destroyed). Compromise with other nations is almost always condemned. As a method for preserving a small, newly emergent religion it may have been necessary; as a policy guide for powerful empires/states, it's a disastrous idea.