I always understood it as a symbol of hakaras hatov. The medinah, despite its many problems, has been HKB”H’s tool to bring Jews and Torah back to Eretz Yisroel, the likes of which have not been seen since the fall of Beitar. Just like we show hakaras hatov to other countries despite their problems (like USA on July 4 and [as the Ponavitzher Rav supposedly said] Lithuania on their independence day), we should show hakras hatov to the medinah. I’m not denying the medinah has been the source of some bad, but since when are bad things that people do an excuse to not recognize and show hakaras hatov for the good things they do?
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