It kinda creates a chicken and a egg situation, no? Because if the Axis win WW2 and Germany, specifically holds their rule over most of Europe for at least over 20 years (which is the case in TNO),
how would there be enough Jews left for a Jewish resistance in the Baltics and other parts of Europe? Doesn't this imply that the Germans haven't committed the holocaust then despite winning Europe and being given pretty much all the time they could ever want to implement it? How would there be enough Jews able to form military resistance when supposedly the Germans should've wiped them out already by the 60s?
Sure the excuse is that Italy, after feeling mad about Atlantropa (which seems kinda contrived and artificial in nature as a conflict, Germany does Atlantropa for literally
no reason), decides to harbor Jews from Europe as a way to spite Germany, which is... Somehow still enough to create an Israel in the Middle East? I don't know much about Italy, but even if Mussolini wasn't as antisemitic as Hitler, I'm pretty sure a lot of the other Italian higher ups were and the common citizen definitely wouldn't give a shit about Jews past their borders. Plus I don't think the Italians could literally go out and pluck every single Jew past the Balkans (which they hold a domain over tbh) enough to also create an Israel in-game.
It simply doesn't add up.