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This is being written to the Jewish people. The chapter before that deals with Gentiles. Paul is telling the Jewish people, who being chosen and boast in following the law, that that is not what saves them. It's not the outward appearance but it's a heart matter. He is speaking to the Jews. It does not say Christians replace the Jews. Ch.1 is dealing with the unrighteousness of the Gentiles and 2 is dealing with the Jews. Paul is saying you boast in the law but you don't follow it. Christians are grafted in, they in no way replace the Jewish people.
Jewish have been designated Israel over and over in the Bible from God Himself. This doesn't mean others are excluded. See the videos "Against All Odds' that shows God's miraculous hand in recent wars, saving the Jews from destruction. He will back His promises always.