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Isaiah 63 has long been misunderstood. So many times we take things too literally, when they were meant to be ironic or even sarcastic. In this case, Isaiah 63 is what is called a Soliloquy.
A Soliloquy is a literary device, used often by Shakespeare, where an actor seeks to inform his audience of his thoughts by talking to himself out loud. Isaiah 63 is God's Soliloquy. It comes immediately after Isaiah 62, which is about true Israel, the holy people, and the New Jerusalem. Then comes the contrast in the form of a Soliloquy:
1 Who is THIS who comes from Edom, with garments of glowing colors ["dyed," KJV] from Bozrah, this one who is majestic in his apparel, marching in the greatness of his strength?"
"It is I who speak in righteousness, mighty to save" (not this imposter from Edom).
2 Why is YOUR apparel red, and your garments like the one who treads in the wine press?
3 I have trodden the wine trough alone, and from the peoples there was no man with Me. I also trod them in My anger, and trampled them in My wrath; and their lifeblood is sprinkled on MY garments, and I stained all MY raiment.
In other words, God makes the claim that HE alone is the one who treads the winepress of judgment upon the nations. So who does this imposter think he is, coming with a robe dyed red, pretending to tread out the grapes of wrath??
It is a case of mistaken identity, and the ruse worked so well that even most Bible translators missed it! They have translated it as if it is God coming from Edom. It is a prophecy of Edom pretending to be the Messiah, as Baruch Levy wrote in a letter to Karl Marx (i.e., Karl Heinrich Mordecai Levy). He wrote:
"The Jewish people as a whole will become its own Messiah. It will attain world dominion by the dissolution of other races, by the abolition of frontiers [borders], the annihilation of monarchy and by the establishment of a world republic in which the Jews will everywhere exercise the privilege of citizenship.
"In this New World Order the children of Israel will furnish all the leaders without encountering opposition. The Governments of the different peoples forming the world republic will fall without difficulty into the hands of the Jews. It will then be possible for the Jewish rulers to abolish private property and everywhere to make use of the resources of the state. Thus will the promise of the Talmud be fulfilled, in which is said that when the Messianic time is come, the Jews will have all the property of the whole world in their hands."
(Baruch Levy, Letter to Karl Marx, "La Revue de Paris," p. 574, June 1, 1928)
http://www.scribd.com/doc/5554557/The-Jewish-people-as-a-whole-will-become-its-own-Messiah
Of course, to understand this, one must know the story of Jacob and Esau in the book of Genesis. One must know how Jacob pretended to be Esau and lied to his father in order to obtain the blessing. One must know that this was unlawful, and that in order to do justice to Esau, Jacob would have to give it back at some point in history.
Isaac prophesied this as well in Gen. 27:40, telling Esau that some time in the future "you shall break his yoke from your neck."
As I showed in my book, The Struggle for the Birthright, the Edomites (or Idumeans) were conquered and absorbed into Judea in 126 B.C. when the Edomites were forcibly converted to Judaism. See Josephus, Antiquities of the Jews, XIII, ix, 1.
This is confirmed by The Jewish Encyclopedia, which says, "From this time the Idumeans ceased to be a separate people."
Most modern prophecy teachers have missed the enormous significance of this historical event. There are many prophecies about Edom or Idumea that await fulfillment in modern times, but there is no nation of Edom any more to fulfill them--unless, of course, we see that the Jews themselves are fulfilling two sets of prophecy. First, they are fulfilling the "fig tree" prophecies of Judah; and secondly, they are fulfilling the prophecies of Edom/Idumea.
The two nations had two things in common: they both desired to return to Palestine; and secondly, they believed that violence was the way to take what was "rightfully" theirs.
This Judah-Edom coalition succeeded in 1948, and they have been consolidating control over the entire land since that time. But in doing this, Esau has done to Jacob what Jacob had done to him in Genesis 27. Esau has pretended to be Jacob in order to get the blessing and birthright. It is, once again, a case of mistaken identity, and prophecy shows that ultimately this ruse will fail because Esau’s character is not worthy of the birthright. The only true solution is to follow Jesus Christ, who is the True Messiah, and whose methods of obtaining the birthright are both righteous and peaceful.
This is, of course, too large a topic to prove in any detail here in a short blog. The full history of this is discussed in The Struggle for the Birthright. Related topics are discussed in shorter books, Who is a Jew? and Who is an Israelite?
The Soliloquy in Isaiah 63 reflects this case of mistaken identity, and gives us God's thoughts on it.