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The Creation of ISRAEL

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Abram, later to be called Abraham, became the father of many nations as promised in the following verses.  God blessed Abram for his obedience in leaving his father's house and going to a strange land by giving him children in his old age. The son Isaac by his wife, Sarai, was to be the son of the Covenant,  while Ishmael, the son of Sarai's servant, Hagar, became the father of all the Arab nations. 
(Gen 12:1-3 KJV) Now the LORD had said unto Abram, Get thee out of thy country, and from thy kindred, and from thy father's house, unto a land that I will show thee:
2 And I will make of thee a great nation, and I will bless thee, and make thy name great; and thou shalt be a blessing:
3 And I will bless them that bless thee, and curse him that curseth thee: and in thee shall all families of the earth be blessed.

(Gen 17:19-21 KJV) And God said, Sarah thy wife shall bear thee a son indeed; and thou shalt call his name Isaac: and I will establish my covenant with him for an everlasting covenant, and with his seed after him.
20 And as for Ishmael, I have heard thee: Behold, I have blessed him, and will make him fruitful, and will multiply him exceedingly; twelve princes shall he beget, and I will make him a great nation.
21 But my covenant will I establish with Isaac, which Sarah shall bear unto thee at this set time in the next year.

Isaac had a son named Jacob, the name meaning deceiver.  He lived up to this name by deceiving his older brother Esau out of not only his birthright, but the generational blessing, as promised to the first-born.  He himself however, also became deceived when later getting a wife.  The day after the wedding ceremony, he found his true love's sister by his side, as she was the firstborn.  He was able to have a second marriage to his true love, but had to serve the father additional years to get her.  He reaped what he sowed, you might say.   It was after serving 'his time' for these women, that he felt led to go back to his family.  En-route he had a personal encounter with the Lord, one that would forever change his life.  No longer was he considered Jacob,'the deceiver' but Israel 'He who strives with God'.
(Gen 35:10-12 KJV) And God said unto him, Thy name is Jacob: thy name shall not be called any more Jacob, but Israel shall be thy name: and he called his name Israel.
11 And God said unto him, I am God Almighty: be fruitful and multiply; a nation and a company of nations shall be of thee, and kings shall come out of thy loins;
12 And the land which I gave Abraham and Isaac, to thee I will give it, and to thy seed after thee will I give the land.

Thus when you hear or read the word Israel, it can be referring to either the land of Israel, as promised to Abraham, Isaac and Jacob, or to the people 'Israel' as derived from Jacob's name change.